Can you cover your own closing costs? Closing costs can range depending on the purchase price of the home (usually between 2-4% of the purchase price) and will very likely be rolled into your total purchase price. When considering closing costs, you can include such things as closing costs (costs associated with doing the title work, your loan, etc) points (monies used to buy down your interest rate, thus resulting in lower monthly payments and an overall interest savings) and/or pre-paids (appraisal fees, if the lender will let you roll it in, etc.) To show what it can really mean to roll in your closing costs, here is an example: if you have $4500 in closing costs now, it will cost you close to $10,000 over a 30 year period to pay that off at 5.5%. It seems nice up front and if you don't plan to live in the house for 30 years, I say ask for the moon!! However, if you have the cash....fork it out! Why spend money you don't have to down the road?
There still exist low down payment programs out there that can get you into a home for as low as 3.5% down and even lower! When dealing with lender related issues, it's best to go to the experts.
Either way, costs are being rolled in, so it's really going to depend on your own, personal financial situation.
In a market like this, it's a great time to buy! I feel confident that the market will turn around, but it would be in your best interest in any market to have enough equity in your new purchase to be able to cover the costs of selling, if for some reason you should suffer a job loss or illness. Always look to the future and consider all the possible scenarios!
I hope this is helpful Lisa!
If you are not working with a buyers agent, please get one. It does not cost you extra as builders rely on real estate agents for 75% of their business. Also, they offer thousands in bonuses to agents that you may be able to use in negotiations. I rebate any bonuses to my clients above and beyond my standard 3% commission so that my clients know I am not steering them to a property for my own benefit. Check with the builder to see what incentives for agents there are currently. (these are typically disclosed in writing at contract signing)
I would suggest negotiating BOTH, but it's up to you and whether or not you have the cash on-hand to pay your own closing costs. Builders are eager to put deals together, so they may work with you and try to negotiate a reasonable deal.
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