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Can you still roll closing costs into your mortgage (NY)

Here's the scenario:

I have about 20-k in the bank.  I am looking to buy a house for about 200k.  Let's just say I put 10-k (5%) down on the house.  Closing costs in my area are probably right around 8 grand.  So, technically would that mean my down payment would only be 2-k (which obviously would only be 1% and not enough to cover the 3.5% min down-payment)?  

Or, can you roll the closing costs into the total cost of the home to make the total purchase price 208k, and the 10k down payment would be considered 4.8% of the total loan? 
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January 11 2013 - Town of Poughkeepsie
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Answers (9)

Profile picture for dave1212
You need to ask for what is called a "sellers concession" since some of what above is true (can't roll closing cost in technically) a sellers concession is the "legal" way to do this. What your basically doing is let's say home is 200k with 10k closing.. You purchase home for 210k and have the additional money rolled in to mortgage to cover closing (10k). It's simple and if selling is willing can be a simple legal solution. Have a good day and good luck!
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May 21
If you put in a good offer on a home I think it would be reasonable to ask the seller to contribute to closing costs. A seller would rather take a full price offer on their home that is listed at $200,000 and pay $8,000 in closing costs than an offer of $190,000 with no closing costs. Everything is negotiable.
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March 27 2013
Now that the market is rebounding I think you can certainly ask for seller's to pitch in ... they have extra cash in their pockets all of a sudden...
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March 27 2013
Profile picture for hpvanc
Smart buyers also know that rolling the closing costs into a loan (if they could) or asking the seller to contribute the closing costs results in an underwater purchase.  While that may not have been overly damaging in times of high general inflation, it has proven extremely damaging for individual buyers and the market in general in times of low general inflation/housing appreciation.

If your situation changes and you need to sell you will find yourself in severe financial straights if you succeeded in getting the seller to pay for closing costs (in essence rolling the closing costs into the loan), or finding another loan program that allows you to roll them directly into the loan.  It is an excellent way to become a foreclosure or short sale statistic.
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January 12 2013
Ken - " the closing cost can basically be rolled into the loan" is not possible on a purchase on a Conventional, FHA or VA loan.
As mentioned, the seller can be asked to pay up to 3% on conventional 95% loan to value, and 6% on an FHA loan. Expect to pay full price probably, and even then some sellers will balk at reducing their net by that amount. You might have to use some of the $20K for closing cost, too.
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January 12 2013
The down payment is different than closing costs and the down payment cannot be rolled into the loan. Are you a first time home buyer? If so there may be grant money available to you like grants we offer to eligible buyers that do not have to be paid back and can be applied to your down payment.
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January 12 2013
Profile picture for wetdawgs
Please note with the "you can ask the seller to contribute....".    Savy sellers know this affects their bottom line, and many savy sellers reject this proposal.   So, while you can ask do not plan on all sellers agreeing.
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January 11 2013
If you go with a FHA loan then you can ask for the seller to contribute up to 6% of the sales price.  With the mortgage tax, attorney fees, etc that will go pretty quickly.  The down payment with this program is 3.5%

If you are doing a basic conventional loan then the down payment is 5% of the sales price.  You can ask the seller to contribute up to 3% of the sales price to help with closing costs.

Your down payment is your down payment and separate from your closing costs.  If you would like to contact me through my profile I would be happy to help someone from Po-Town out (lived there for about 12 years)
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January 11 2013
The closing costs basically can roll into the loan.  You only need to bring down 3.5% of the purchase price.  Or you can get the Seller to pay up to 5-6% of the closings costs negotiated in the Agreement.  3% is pretty standard and should cover most of them.  If you have anymore questions please let me know.
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January 11 2013
 
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