My husband and I have enough money for the down payment on an FHA loan, but when it comes to the closing cost

Asked by Maggie, San Pablo, CA Thu Mar 26, 2009

we dont have it. We have been told that on REO's the bank/lender will pay for the closing cost. But we have also been told that they pay up to 3%. So, is it 3% of the total sales price or something else? We get different stories and its frustrating. Do we even have the power to tell the bank "Hey - you pay for the closing cost!"

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J Mario Preza, Agent, Daly City, CA
Wed Dec 1, 2010
Ready, willing and ABLE, is an axiom common in the real estate arena. Although your comment says you have the money for the down payment on an FHA loan, you didn't say at what price, nor how much. Nowadays it isn't about having just the 3.5% for a down payment, it is about having that plus your closing cost -- even if you plan to ask the bank to credit or "pay" for you closing costs. I have a client who thought similarly as you seem to be implying, that they might ask the bank for that closing cost credit; we got it, but, the bank required the buyer to pay for all the expenses and then got a credit back in escrow (it is like a reimbursement for the payment being made). So, if you don't have the money that you'll need for everything, you may not be entirely "READY" or "ABLE" unless you buy a less expensive house and somehow make the money you do have (oh, and be sure you have it in the bank for at least 3 months because they'll check on that too), work for both the down payment and the closing cost -- even if and when you get that credit back from the seller. Oh, and your closing costs typically will run about 2.5 to 3.25% of the price -- with mortgage insurance and all the typical costs to purchase, points, inspections, escrow, title, pre-paid items, etc.
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Steven Ornel…, Agent, Fremont, CA
Mon Mar 30, 2009
Hi Maggie, I formally went through the FHA Loan Agent Certification process. The maximum Seller Credit using a FHA loan is 6% of sales price. Non-FHA is 3%. I have yet to be unsuccessful in getting 6% concessions from non-distressed, short sale, or REO listings. Persistence and the willingness to walk away from the deal is the key.

Best, Steve
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Jerry Flynn, Agent, Clayton, CA
Thu Mar 26, 2009

When you make an offer on a property, you can ask for the seller to pay the closing costs. They can say no, and counter you back with what they will pay. It's a meeting of the minds, and once you have that, you have an accepted contract.

I have helped a lot of buyers get into homes. There are always ways to get the job done. Like they say, if there is a will, there's a way. That's my Motto. Get the job done, so everyone is happy.

I have been helping buyers, like yourself get into homes for the last 33 years. I have the experience to help you out in your situation.

Just contact me at:

Jerry Flynn
Old West Realty Inc.
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Bernard Gibb…, Agent, Danville, CA
Thu Mar 26, 2009
Are you only looking at REOs, Maggie? If you are, they will oftem agree to pay up to 3% of sales price towards closing costs and this is in line with FHA rules. "Regular" sellers will often agree to the same thing.

Bernard Gibbons

Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist
J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526
Phone (925) 997-1585
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Tim Ambrose, Agent, Castro Valley, CA
Thu Mar 26, 2009
Hi Maggie,

Be it a regular seller or a bank owned property, asking for closing cost can be negociated. I've had bank owned properties offer as much as 6% closing cost for my clients and as little as $3000. So when selecting a Realtor and preparing an offer, request closing cost as part of the purchase contract and wait to hear back from the bank . I hope this helps. Feel free to contact me for any additional information.
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Catherine My…, Agent, Walnut Creek, CA
Thu Mar 26, 2009
3% of the purchase price will often be paid by a seller and/or bank as in the case of an REO property. Its becoming "customary" these days for 3% closing costs :)
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