Buying a house isn’t cheap, and cash flow and income problems can result in a missed opportunity to buy your own place. Plus, getting a mortgage loan has become more expensive in recent years, as the majority of lenders now require a down payment of approximately 5% of the sale price. But this isn’t the only big expense associated with ownership – buying a house also involves closing costs, which can equal 3% to 6% of the mortgage balance.
Having to come up with both closing costs and a down payment out-of-pocket is more than some borrowers can handle. In fact, these expenses alone cause many to put off buying a home. However, if you have money for a down payment, don’t let closing expenses crush your dreams – instead, strike a deal with the seller to pay for your closing costs.
If you can’t get the seller to pay your closing costs, ask your lender to include all or a portion of the closing costs in your loan. This option is available on FHA and VA loans, but not on conventional loans. For example, if the seller can only pay a small percentage of your closing costs, your mortgage lender can roll some of the remaining fees into your mortgage. Understand, however, that this method not only increases your loan balance, but also your monthly payment.