Closing Costs?

Are closing costs always part of the negotiations? TIA

Closing Costs?

Closing costs are usually usually non-negotiable- they can range from about 2-6% of your mortgage based on your lender. Occasionally you can have the sellers pay some of the costs.

Re: Closing Costs?

Re: Closing Costs?

Closing Costs?

Sellers don't really negotiate them here in NY. It's rare. That's one of the annoying things about all of those HGTV shows. Some mortgages allow you to roll all or a portion of them into the loan. And while the general rule is 2-6%, my attorney said he always sees them around the 6% mark.

Closing Costs?

a sellers concession the seller does not PAY any part of your closing costs.

In NY having the seller pay any part of closing in not done.

A sellers concession is nothing more than upping the contract price to include a portion of the closing costs into your mortgage. So the seller doesn't pay. Just know usually that if the house does not appraise for the higher contract value the seller will not let you out of the contract because that higher value is due to the closing costs and not the actual agree upon sale price of the house.

Re: Closing Costs?

Previous posters are correct - closing costs are not "negotiable" in NY in the sense that you can't ask the seller to pay for them. (Although occasionally a seller will include some kind of cash incentive to the buyer, as a selling tactic, such as a $1000 cash bonus at closing... of course that could then be applied to closing costs or whatever you choose. But it's a rare situation).

You can do a seller's concession, basically financing the closing costs by rolling them into your mortgage.

But there are some limitations. With an FHA loan, you can always roll in up to 6% o the agreed upon price. But with a conventional loan, if you are putting less than 10% down, you can only roll in up to 3%. (10% or more down, you can do 6%.)

In a competitive market, I would only advise a buyer to go this route if they have to. It does make your offer a bit less desirable. Some listing agents and sellers really don't understand it, and as a previous poster said, it can be an issue with the appraisal (as you are inflating the contract price to add in the closing costs).

It's not necessarily true that you can't get out of the deal if the house doesn't appraise for the full amount (purchase price + closing costs). Many sellers won't take a deal unless the buyer will agree to proceed regardless of whether or not they can get the full seller's concession. But that only works if the buyer is doing it to conserve cash, but has the money if necessary. Some buyers really don't have the money, and in that case, they wouldn't be able to proceed without the seller's concession and couldn't agree to such a provision. So it really depends on what's negotiated and what's in the contract.

All that being said, seller's concessions are not uncommon, especially with FHA buyers who are putting the minimum down.

But if you can, it's almost always better to lower your down payment and pay cash for closing costs. The only exception would be if perhaps the lower down payment would mean you couldn't go conventional (since FHA has pmi for life of the loan and higher pmi than a conventional loan) OR if it meant you were going under 20% down on a conventional loan (causing you to pay pmi if you otherwise wouldn't have to).

But the best thing is always to speak with a mortgage loan officer to see what is most advantageous in your particular situation.