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Want to purchase a condo, but I only have enough for a down payment?

I'm a first time buyer, so wanted to do the FHA down payment of 3.5%. Lender I spoke with told me I wouldn't get help with the closing cost, and that I have to come up with it myself, because of the market. Is this true? Also, she said with a 150,000 condo, I should have 2,800 in the bank. Is this true as well?
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November 03 2013 - Corona Hills
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Answers (6)

It is important to have money in the bank because the underwriters will want to see that you have reserves in the bank for any tight financial situations. Also, some lenders can package a loan where it can include closing costs. The best thing for you to do is to shop around and find a lender that can work with your situation. So speak with a lender like myself who would be glad to speak with you to help you get the loan that you need. If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
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November 04 2013
You can roll the closing costs into the loan by offering more than the asking price and then requesting the seller to credit the extra towards your closing costs.  This is very common in Massachusetts and the only issue is appraisal.  You're going to need the out of pocket expense for inspections and appraisal, but I've never seen a deal not go through if the net to the seller remains a good, solid figure.
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November 03 2013
Your lender is trying to caution you that you may not have enough cash to close.

While it is certainly possible to get the seller to pay some closing costs (it just depends on your market and the property) there are some items that the seller may not pay for.  Many will refuse to pay for inspections, home warranties and escrow hold-backs (for taxes & insurance).  Those items will likely need to be paid by you.

In addition your lender will require you to have reserves in the bank to pay your bills for 3-6 months.

Perhaps you can get a relative to "gift: you some money to meet the down payment requirements.  Either that or save more money or buy a lower priced home.
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November 03 2013
Profile picture for wetdawgs
In a seller's market, many sellers will not pay for the buyer's closing costs.   It doesn't hurt to ask, but budget assuming it isn't going to happen.    Closing costs are traditionally a buyer's expense.     The lender is also telling you that they want you to have some reserves, in other words not spend absolutely every last penny in the purchase process.   That makes sense to me.  

So, your savings plan needs to accumulate enough to cover down payment, closing costs and a reserve.     Ask the lender for an estimate of closing costs so you can have a target.
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November 03 2013
You MIGHT get help with the closing costs, but I'm afraid you don't have enough money to buy a condo. $2800 barely enough for you to live on for a month if something happened to you at work, you really really really really need to have six months' living expenses saved up before you buy a home. No matter how good a deal it is!

All the best,
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November 03 2013
Talk to a lender - they can tell you exactly what you'll need.  If you don't have closing costs ask the seller for them.  FHA will require that you come in with a minimum of 3.5% unless they have gone back to a 3% program but a lender can fill you in more accurately
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November 03 2013
 
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