Closing Cost Options That Help Buy or Sell a Home

Closing Cost Options That Help
Buy or Sell a Home     



     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 ...  

 Gene Mundt Mortgage Website     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.  
     

 Preparing to Buy a Chicagoland Home: Seller-Paid Closing Costs

     
     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%
     
     For FHA:

  • Up to 6%

     For VA:

  • 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:

 

Gene Mundt
Mortgage Originator  -  nmls #216987  -  IL Lic. 031.0006220  -  WI Licensed
 
American Portfolio Mortgage Corp.
nmls #175656
 
Direct:  815.524.2280
Cell or Text:  708.921.6331
eFax:  815.524.2281
 

  

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

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. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

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Comments

Nice to always see a list of what clients need to give them.

Lauren Selinsky

Posted by Lauren Selinsky Broker CRS, "Your California Real Estate Broker" TM #oclauren (California Coastal Estates) over 1 year ago

In our land of thinventory  a Seller will not pay closing costs..even at an escalated price ....!

Posted by Sally K. & David L. Hanson, WI Realtors - Luxury - Divorce - Short Sale (Keller Williams 414-525-0563) over 1 year ago

Thanks Gene.  This is great advice for some home buyers that may need a little help in the financing phase of their purchase.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 1 year ago

Gene

Thanks for an informative post that all buyers, especially first timers, should read. The terminology can be confusing and I have often found, as you point out, that buyers are not aware that there are closing costs in addition to that big downpayment. Education upfront is key! Seller paid closing costs, or partially so, are kinda rare here because of our market but they happen, and it's a good option for some.

Jeff

Posted by Jeff Dowler, The Southern California Relocation Dude - Carlsbad (Solutions Real Estate ) over 1 year ago

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi Great Information in an easy-to-understand post for first-time homebuyers, and others, who may not understand closing costs.  

Posted by Elyse Berman, PA, CRS, Pet-Friendly Realtor, 561-716-7824 (Best Connections Realty, Inc.) over 1 year ago

Great post, Gene.  Second-home owners often forget about these costs, too (and we hardly ever see them in Offers here, but they are common in Green Bay and the Fox Valley).

Posted by MaryKay Shumway, Door County, Door County Wisconsin's Real Estate Expert (The Kellstrom Ray Agency, Inc. (Est. 1948)) over 1 year ago

Hi Gene - Great information. Unfortunately, our market has gotten so overheated in the price ranges where those are most useful that they have all but disappeared.

Posted by Dick Greenberg, Northern Colorado Residential Real Estate (New Paradigm Partners LLC) over 1 year ago

Nice contribution Gene. Something to keep in mind when faced with a closing cost dilemma.

Posted by James (Jim) Lawson, DBA, Broker Associate, RSPS, BPOR, HI & PE (DomainRealty.com LLC) over 1 year ago

Very comprehensive description. Suggest an example of a avg priced home and put in some range values and tally total.

Thanks

Posted by Sam Shueh, mba, cdpe, reopro, pe ( (408) 425-1601) over 1 year ago

Nice post post, Gene.  The information is clear and easy to understand.  I will share this one. Thanks!

Posted by Chris Lima, Local or Global-Allow me to open doors for you. (Atlantic Shores Realty Expertise) over 1 year ago

Thanks for the reminder Gene, another reason to check in with a buyer client by phone. Kudos.

Posted by Nancy Hertz (William Raveis Legends Realty Group) over 1 year ago

Gene,  This is all great information for home buyers. The closing costs can add up ... quickly.  If credits are to be issues then making them part of the contract is the best course of action.  Congratulations on the Feature!

Posted by Kathleen Daniels, San Jose Homes for Sale - Probate Broker (KD Realty - 408.972.1822) over 1 year ago

This blog was definitely worthy of being featured, some people aren't aware that they can get the seller to pay part or all of their closing costs.

Posted by Sybil Campbell, REALTOR® ABR, SFR, SRES Williamsburg, Virginia (Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia) over 1 year ago

Gene

Thanks for sharing an outstanding explaining closing costs.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 1 year ago

Gene

Congratulations on your post being a feature.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 1 year ago

Hi Gene... well-written post on an issue that many don't fully understand and deserving of a feature. The biggest issue with closing costs right now is that in a market that is so tight on inventory, I'm not seeing sellers need to provide closing costs. I see more buyers now rolling them into their loan with the lender... maybe a post on that option?

Posted by Nina Hollander, Your Charlotte/Waxhaw/Fort Mill Area Realtor (RE/MAX Executive | Charlotte, NC) over 1 year ago

If the client is unaware or has an unrealistic view of how much is really needed for closing,  I blame the lender.  It is their job to discuss these matters with the client..  Some Buyers aren't comfortable discussing their finances with the Realtor.  Often, I find myself having to explain what the Buyer should expect if they choose a certain house and that's when I'll find out their lender hasnt discussed this in detail with them... 

Posted by Tabitha Rector-Richardson, Premier Homes Realty (443) 415-4215 (Premier Homes Realty) over 1 year ago

When I was buying for the first time and thought I had it figured out (lol), closing costs came up. I thought it was a gimmick and argued against it all. In my mind, I just wanted to purchase a home not all these services. This is a subject that should be brought up more often as it is necessary and mandatory in Real Estate

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 1 year ago

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ,

What a worthy featured post! Great list for buyers so they can understand all that will be required when making a home purchase. With our high demand and low inventory rarely will sellers pay closing costs unless it is in lieu of making repairs.

Posted by Dorie Dillard, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.346.1799) over 1 year ago

Thanks for sharing!!!

Seller-paid Closing Costs option can also provide financial "flexibility" to a Buyer after their Closing.  The merits/disadvantages of using this option issomething that I, as your Mortgage Originator, will analyze and discuss with you prior to your making an offer on a home.

Posted by Sham Reddy, CRS (H E R Realty, Dayton, OH) over 1 year ago

Lots of problems right now.  First time homebuyers with no closing costs funds in their pockets really don't have a chance.  Our market, especially the under $200K price range, is a feeding frenzy.  With multiple, multiple offers, sellers won't even consider an offer with closing cost assistance. 

Posted by Jeanne Gregory, The most important home I sell is YOURS! (RE/MAX Southwest) over 1 year ago

Working with two buyers now that "needed" all their closing costs paid.  It does make it interesting in the contract negotiations.... but it does help to know the different programs and what is allowed

Posted by Macy Babb, Realtor, SFR, HUD/REO Certified (Re/Max All Properties Realtor - 404-234-6166) over 1 year ago

It is nice to have options as a buyer when closing on a home. Just close the deal.

Posted by Harry F. D'Elia, Investor , Mentor, GRI, Radio, CIPS, REOs, ABR (Real Estate and Beyond, LLC) over 1 year ago

Great information here Gene. In my market sellers pay most of the closing costs and lenders have learned to be very creative too giving lender credits to help keep the costs down.

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) over 1 year ago

This indeed is a great solution - a win-win for some buyers Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi .

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (eXp Realty) over 1 year ago

As a Selling Agent, I feel it's my duty to provide closing costs up front to my Sellers so there are no hidden surprises. They always appreciate it.

As for you, you did an outstanding job on this post, as you always do. You are definitely someone I would trust for my Chicago and Wisconsin relatives and friends. 

Posted by Patricia Feager, Selling Homes Changing Lives (DFW FINE PROPERTIES) over 1 year ago

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi This is a wonderful post explaining closing costs to first-time home buyers.  Such important information!

Posted by Elyse Berman, PA, CRS, Pet-Friendly Realtor, 561-716-7824 (Best Connections Realty, Inc.) over 1 year ago

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ,

I just caught your post when Gabe Sanders re-bogged your post. Congrats on a very worthy featured post..you really provided excellent information!

Posted by Dorie Dillard, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.346.1799) over 1 year ago

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