Closing cost by builder...Pl Help!!

FT_Buyer
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My builder is paying closing cost but I don't think I would use all of it during closing. Could you please give some idea where I can use this? I have explored following:
Buying points: not sure at this point if I will do that..
HOA (Condo fee): I am considering this..He is ready to pay two year condo fee in advance..not sure though if it is legal...how will I enforce this...I still have to sign P&S

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March 22 2009 - US

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Eric Smith, "ohiosmitty"
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So basically what he is willing to pay in closing costs is not being fully used up.

Why not use it to buy your rate down(points)...what aren't you sure about?

Also, not sure what is left over, but consider a 2/1 buydown. This is when year 1 is 2% lower than your interest rate and year 2 is 1% lower and years 3-30 are at your normal qualifying rate.
Ex: Say your rate is 5%
Year 1 would be 3%
Year 2 would be 4%
Years 3-30 would be 5%

Essentially, the builder is prepaying some interest for the first 2 years.

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March 22 2009

FT_Buyer
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Thanks Joseph and Eric for your answer...

Essentially both of you suggesting to buy points..Please could you explain why I should favor this option instead of condo fees...Buyer has indicated that he is ready to pay pre-paids and he mentioned this in P&S agreement...

Also Eric what I am not sure is of whether it would be a good strategy to buy points now if I would refinance in few days if rates go down in future. If i buy points now I would probably not be able to refinance soon as I want to recoup the cost...What you think?? but thanks for suggesting this novel approach...

I am first time buyer so I have one more ques about classifying this for lenders:
My new home is a condo (new construction) in a big condo community and consists of four units (each of 2 stories) in a single building. How to classify this for lenders....

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March 22 2009

JP and Jen Piccinini, "JPHOMESFORSALE"
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Sounds like your builder is willing to deal to sell the home. Careful because closing costs sometimes do not include pre-paids i.e. your escrow for the first year which include insurance and taxes.

Get a Good Fait Estimate from your lender that will include your pre-paids. Whatever is left over I would recommend using toward the buy down of the rate.

Also, dont forget about the 8,000 tax credit from uncle Sam. if you are a first time home buyer you should most definately take advantage of this.

Thanks for buying a home!