Get Money For Closing Costs

First-time home buyers rarely have the funds for closing costs, or they may have the funds, but they are tied up in IRA’s and 401k’s, which should not be tapped unless absolutely necessary. 

100% financing is widely available, but this does not cover the multitude of little fees that add up.  Standard Closing Costs include things like: Transfer Taxes, Title Insurance, Appraisal cost, Home Owner’s Insurance, and certain “pre-paids” like your property taxes, a certain amount of which MUST be paid at closing.

It really is possible to get into a home for very little money out of pocket.  You are going to need some money for things like the deposit to the seller and home inspection, but here’s how you get money for all that other stuff:

1.  Seller Concessions: In a buyer's market, you, the buyer, are more in control than ever.  A seller concession means the seller will credit you a certain percentage of the sales price at closing.  Most loans will allow up to 3% of the sales price as a seller credit.  On a $200,000 property that would be $6000.
2. Down Payment Assistance Programs:  You can make up to $100,000 and still qualify for certain programs.  These programs offer money towards closing and low interest rates.  You are able to combine these programs with seller concessions.
3.  Loans that allow you to borrow more than 100% of the sales price.  There are some loan programs that will allow you to borrow up to 103% or even 105% of the sales price.  This is not recommended, unless you absolutely have to.  Also, rates on these loans tend to be a little higher, plus you are borrowing more than what your new property is worth and that’s never a good idea!  This is generally how those “no closing cost” programs you hear about work.  Raise the interest rate slightly and credit back to you, but you shouldn’t pay a higher rate unless you have to.