The accumulation of a Down Payment is often a First-Time Homebuyer's primary focus once the decision to buy has been made. Monetarily and mentally, the down payment becomes the one central goal they focus on ...
So when I raise questions regarding the availability (and source) of funds needed for Mortgage Closing Costs, the question can catch them by surprise.
Oftentimes, First-Time Buyers are either completely unaware that funds will be needed for these Costs, they've (incorrectly) assumed that their Down Payment covers them, or that the costs can be "rolled into the loan" (not allowed, in MOST cases).
But it's a fact: There are (typically) Closing Costs to consider when borrowing money to buy or refinance a home.
What are some of Closing Costs encountered? The following are the most commonly seen Closing Costs in Chicagoland transactions:
- Title Insurance
- Closing Services
- Lender Fees
- Home Insurance Premium (also Escrow set-up)
- Attorney Fees (in Attorney States/if used)
- Appraisal Costs
- Real Estate Taxes (Escrow set-up)
- Home Inspection Costs
- Recording Fees
- Transfer Taxes (where applicable)
- Credit Report Fees
- Flood Certifications (where applicable)
- Homeowners Association Documents (if applicable)
... they can add up to thousands of extra dollars needed in order to close a loan.
But there's good news. Closing Costs don't need to be a hurdle for Buyers to jump. Options are available to assist Buyers with some of these Costs.
One such option is for Buyers to request that the Seller pay a portion of their Closing Costs.
It's important to point out that this request should be made at the time of your offer and become part of your Real Estate Contract. The payment of these fees is subject to guidelines.
These Seller contributions are seen fairly often in Chicagoland home buying transactions. They help facilitate real estate transactions, as they make it possible for Buyers and Sellers to initiate and complete deals that would not have been possible otherwise.
Note: There are maximum contributions a Seller can make. Different lending programs allow for different contributions. Those contributions, expressed as percentages of the Sales Price, are provided below:
For Conventional Loans:
- Fannie Mae - 3% if Owner-Occupied *
- Freddie Mac - 3% (2.5%in some cases) if Owner-Occupied
- Investment Property - 2%
* Can be greater, if Loan-To-Value is less than 90%
- Up to 6%
- Up to 4%
Besides the obvious benefit of initiating or keeping a transaction together ... the Seller-paid Closing Costs option can also provide financial "flexibility" to a Buyer after their Closing. The merits/disadvantages of using this option is something that I, as your Mortgage Originator, will analyze and discuss with you prior to your making an offer on a home.
Closing Cost monies don't have to be an insurmountable hurdle to your buying a home or qualifying for a mortgage. Many options exist that can help you buy.
The key to your success lies in finding and working with a Mortgage Originator that is aware of their availability, offers them as a part of their services, and is successful in putting them to work on the clients' behalf ...
* To learn more about the monies needed to buy a Chicagoland - IL - WI home, please read my article, "Think You Need a 20% Down Payment?", then contact me with your questions ...
* Hoping to Buy, Refinance, or Build a Home in Will County or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I can be easily found at:
Mortgage Originator - NMLS #216987
IL Lic. #031.0006220 - WI License #216987
Gene Mundt, Mortgage Originator, 40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking: #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including: The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin.
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