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Rolling in closing costs in a conventional or a HomePath loan

We've found a Fannie Mae owned house we want to buy and live in. The loan quotes I rec'd yesterday show 5% down and almost another 5% in closing costs ($180K mortgage, with $16-17K due at closing).

In the past, I've never paid more than $5-7K for a loan or a refi. Granted, I've only done it four times (the last in 2010), so I'm wondering if things have changed. Could we have our closing costs rolled into the mortgage and just pay the down payment? We are thinking about doing a conventional 30 year or possibly a HomePath (or HomePath renovation). I know a lot has changed, so I'm not sure what the norm is now.

If it matters, our credit scores are good (780 and 784). Thanks for any answers you have!
  • August 09 - Gainesville
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Answers (10)

I see that you have a lot of great answers here. The reality is I can show you a way that you will not only come out of pocket for less money at closing but will save more money on your home loan all together. There is a way to roll your closing cost into your loan and I'd love to show you how. Feel free to contact me. My contact info can be found on my profile.
  • August 11
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Fannie Mae is pretty good with paying up to 3% of the closing costs.  I would ask the agent to go back to Fannie and ask or rework the contract with the listing agent.

Another option is to ask the lender to work with you on getting a lender credit to pay closing costs.

Thanks!

Adam
  • August 11
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More than likely the $16-17K due at closing includes your $9,000 down payment. Ask your loan officer for an itemization of the settlement charges. Also ask your Realtor to submit your offer with the seller covering up to 3% of your costs. Good luck with the offer. 
  • August 11
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Laura,  you can get some closing cost help by accepting a higher rate. For example, a 4.5% might not pay a credit, but 4.75% might pay 1% of the loan amount. The money will be credited to you at the closing to help pay closing costs and /or pre-paids.

  • August 11
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Laura, I am a Fannie Mae listing broker here in Florida, specifically Miami. The devil is in the details. Feel free to send over your good faith estimate, and I can take a look and let you know if you are getting a clean deal and what your options are. But you can definitely ask for some closing costs to be paid by the seller when you make your original offer.
  • August 11
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The answers so far have been accurate but if I understand your question more specifically you're wondering why they may be so high in the first place....   Depending upon where the property is located in Florida hazard insurance is considered a prepaid expense and can be one of the most expensive costs in closing.  Ask the lender you select for a "Fees Worksheet" which should breakdown most of the fees which in most cases will be all third party related fees.  Also, beware that although REO Sellers may offer to pay for Owner's Title Policy many title companies will then inflate the other charges such as the Lender's Title Policy which should be issued simultaneously at $25.00.  I have experienced several title companies that charge excessive amounts above the promulgated rates...always request a fees sheet from the title company before making such a commitment.  

Stephen B. McWilliam, ABR,CRB,CRS,GRI

President & Broker - NMLS#375690

Florida Licensed Real Estate Broker & Mortgage Lender - NMLS#393326

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  • August 10
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To answer your question in a nutshell, closing costs can never be financed in on a conventional loan.  You can ask for a seller credit of up to 3% if you only put the minimum 5% down payment, and if you put 10% down you can ask for up to 5% i believe.  Regarding the $16-$17k due at closing, that sounds like closing costs, prepaids, and down payment all together.  If you tale all costs and down payment into consideration then it doesn't sounds out of the ordinary. 

5% of $180k is $9,000, then add your estimated prepaid's and closing costs (1 whole years homeowners insurance policy + 2 months additional reserves for homeowners in escrow, 2-6 months of property taxes for escrow) also title fees, title insurance, transfer taxes, settlement fee from the title company, lender origination fee, etc. 

Also depending on the interest rate you are requesting are you paying any points to buy down the rate?

I would just get clarification from your loan officer if they were including the down payment in with the closing costs as it may have just been a miscommunication.
  • August 09
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A conventional loan with only 5% down will allow no more than 3% to be contributed by the seller. The amount the seller can pay depends on how much you put down. For example if you put 10% down, then you can get up to 5% seller contributions. This would also depend on what the seller is willing to give. Another way to cover your closing costs is to take a higher than market rate for your particular situation. Assume you can qualify for a 4.25% rate at PAR, but you want the lender to cover some of your costs. You could take a 4.5% rate and depending on the difference of the margin it can be applied to your loan amount and pay down closing costs. Feel free to reach out if I over complicated it for you.
  • August 09
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You should be able to receive a loan with a credit high enough to cover your closing cost. Due to your credit score and th property being eligible for a home path loan. I would welcome the chance to explain your options further.
  • August 09
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Thank you, for your post on here and thank you for checking to see if you are getting a good deal.  The closing costs do seem a little high to me and would be more in line with what you have done in the past.  It has been said though that closing costs for home loans has gone up, so say the studies.

In any case, you cannot roll in the closing costs in to the loan but you could ask about lender credits to cover some of those closing fees.  If you have not made an offer on the home yet ask the seller's to pay for all or part of your closing fees.  Ask your real estate agent to structure the deal to include your closing costs in to the purchase offer. 

If you would like to further discuss reach out to me through my profile.

  • August 09
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