can you purchase a home without closing costs?

Asked by Rebecca, Harpers Ferry, WV Mon Jan 18, 2010

Help the community by answering this question:

+ web reference
Web reference:

Answers

10
Brendabyars59, Home Buyer, Washington, DC
Sat Feb 9, 2013
I live in the Winston-Salem area. I was wanting to know if I can buy my first home without the closing cost? A home under 80,000 dollars.
0 votes
HI Brenda,

You may want to post this as your own question so it will show up to the general public. Here, it only shows up to people who have responded to the previous question.

To answer you though, there are always closing costs. Can't get away from them. However, if you have your agent write up an offer where the seller pays your closing costs, or most of them, then you could get out of less from your pocket. Also, check with your lender on the possibility of obtaining a mortgage from USDA if the area you want to live in qualifies. Other than a VA loan, it is the only 100% loan left out there, and in some cases it can go up to 115% percent, meaning it will cover your closing costs.
Flag Sat Feb 9, 2013
David Burnham, , Washington, DC
Thu May 26, 2011
If you are asking about zip 20007, then you may not qualify, but DC does have a program for moderate to lower income residence to essentially get a loan to cover all of their closing costs. It essentially makes you put in half your liquid assets towards closing, with a minimum of $500. So if you have saved only $1000, then you could go to closing with only $500.

Like I said, in zip 20007, you probably could not afford a home and still be under the income limits for HPAP, but you can in other parts of the city. See the link below for details on HPAP.
0 votes
Leslie Byrne, Agent, Millsboro, DE
Thu May 26, 2011
Do you have good credit? Is your debt to income ratio wide? If the answer is yes to both then you might be able to get a home for as little as $1000 out of pocket on your closing costs under many different scenarios from FHA loans to seller concessions bank or privately owned - either. Don't forget that an inspector is your cost and that will eat up $500 upfront as well as other inspections that might arise.
0 votes
Galina Barba…, Agent, Island City, OR
Fri Apr 29, 2011
How to Buy a House With No Closing Costs

So you've found the perfect house and now it's time to close on your home loan. Before you can get the keys to your new house, you'll first have to pay closing costs. Closing costs are fees that you must pay to complete your mortgage loan and get into your new home. Closing costs generally consist of fees for such things as appraisals, credit reports, and title searches. Generally closing costs start at around $2,000 and go up depending on the size of your loan. However, there are ways to buy a house without having to pay closing costs.

Ask the seller to pay all of your closing costs. This is a great bargaining tool to use when purchasing a home. Typically sellers will not mind paying closing costs if they want to quickly sell their home.

2
Contact local banks and mortgage lenders and ask if they have no-closing-cost loans. Some lenders will provide mortgage loans having no closing costs. Be sure to ask the lender what the difference would be in obtaining a no-closing-cost loan versus a loan with closing costs so that you can make an appropriate decision as to whether this would be the right choice for you.

3
Contact your local U.S. Department of Housing and Urban Development (HUD) office and ask them about closing cost assistance programs they have. They will be able to tell you information about various assistance programs in your state that will pay your closing costs. Typically, to participate in these programs you must meet certain eligibility requirements, such as income and credit criteria.
0 votes
Phil Bolin, Agent, Alexandria, VA
Fri Apr 29, 2011
There are always costs associated with any purchase. The question is: what are the ways to minimize cost and maximize value? That's the key. Lower prices do not equate to a better value. A good example of this is the quality of the title search in the transaction. Does the title examiner look back 60 years or just since the last sale? You should look at loan fees, title charges, and commissions to find out if you are really getting a good value for your money.
0 votes
Kelly Putz, Agent, Fairfax, VA
Tue Jan 19, 2010
Hey Rebecca,

We're practically neighbors! I live in Knoxville, MD, so I know the market out here fairly well, though I'm not licensed in WV, but I am in DC, MD and VA.

As to answering the question directly "Can you purchase a home without closing costs?", the answer is no. There are ALWAYS closing costs because the people who do all the title research, paperwork, document copies, tax recordation, attorney, etc. - all have to get paid.

In our area, working with your bank and using the home buyers tax credit, it is possible to not have to PAY closing costs, because a majority of the home prices are low enough that $6,500-$8,000 would be plenty to cover the closing costs. However, in this market, I would have no problem whatsoever asking the seller to cover closing costs for you, so it doesn't come directly out of your pocket. What that means is, if you were to offer to buy a house for $180,000 and we asked for $5,000 in closing costs, then your loan would be $180,000, but the seller would keep $175,000 and give you back $5,000 for your closing costs. It's really just a round-about way of rolling the closing costs into the mortgage and paying them later, but the banks won't let you do it directly, it has to be a gift back from the seller to do it that way. If we did that, then the tax credit could be used as part of your down payment on the house, making that $180,000 house cost you only $172,000 as a first-time homebuyer after the tax credit.

Also, in our area, you could also possibly qualify for a USDA mortgage, which I believe is just about the only 100% mortgage left. That means you wouldn't have to have any money for a down payment. Talk to a local lender about the USDA mortgage or I can recommend one in Frederick who has worked with them.

Let me know if I can help!

:)
Kelly Putz
Realtor®
DC/MD/VA
Kangal Real Estate
kputz@kangalre.com
703-961-8663
0 votes
Aaron Smith, Agent, Washington, DC
Mon Jan 18, 2010
Rebecca, the other agents seemed to have covered the paying of the closing costs, but, in case the question was more of a 'What are closing costs?' and 'Why do I have to pay them?", then I'll babble here a bit.

Closing costs are those costs -ABOVE THE SALES PRICE- that are paid at closing. They include transfer and recordation taxes, lender fees, insurance fees, inspection fees, title/escrow/legal fees, and, sometimes, repair or remediation fees.
Typically < and it does vary from locale to locale >
1) Taxes are split about even between buyer and seller;
2) Lender, insurance, & inspection fees are incurred by the buyer;
3) Title/escrow/legal fees are different for buyer and seller, depending upon how hard it is to clear title; &
4) repair & remediation are often paid by the seller.

How much these will run you, how much you will be responsible for, how much can be paid by the seller, etc. i.e., all the possible variations are one of those things that get negotiated (as the other agents have said) BUT, also, the lender often has some say in how much credit the seller can give you.

(Yet another reason, IMHO, that buyers really need a buyer's agent. This can be a bit overwhelming. Hiring a Buyers Agent will be the best money you never spent!)

Cordially,
0 votes
James P. (Ji…, Agent, South Padre Island, TX
Mon Jan 18, 2010
In the current market here on South Padre Island, I (as your agent) would have no problems asking the Seller to pay your closing costs! There are limits to the total amount based on the Contract/Sale Price for some underwriters/lenders. Some new home builders will pay them in a heart beat and have lenders ready to fund provided you meet their credit criteria. Check with your agent and then your lender for specifics.
get a "Good Faith Estimate" from your lender to determine what you must bring to the table to close the deal. Don't forget your down payment!
0 votes
James Downing, Agent, Dunedin, FL
Mon Jan 18, 2010
As stated before, there will always be closing costs when you a buy a home. However in this market, we are often able to negotiate with the sellers to pay for the buyers closing costs. This allows many people to get into a home for as little as 3.5 percent down (fha loan).
0 votes
Kathy Weber, Agent, Murrieta, CA
Mon Jan 18, 2010
Rebecca,

You can have your agent write your Purchase Agreement to request the Seller to pay your closing costs.

There will still be costs associated with your Purchase. Your "HUD", from escrow will breakdown all closing costs associated with your purchase. (i.e. - escrow fees, transfer fees, any impound prorations, taxes, insurance, etc...)

Good luck!
Web Reference:  http://kathyweberhomes.com
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more