Roll over closing cost along with mortgage loan

cookie_growJuly 28, 2010

Hello, do banks allow the closing cost to be rolled over with the loan or do we need to pay upfront. I was planning to get a 95% loan of 213000, with 5% down, $11,000 and then pay $10,000 in closing cost.

However is it possible to have this $10,000 amount rolled over and take a total loan of 223,000. Has anyone had experience with this kind of roll over or is this usually done?

thanks,

T

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Billl

5 years ago, you probably wouldn't have had much trouble finding someone to make a loan like that. You basically are looking for someone to make you a 222k loan on a 223k property - about 100% financing. The market for those type of loans has pretty much dried up with the housing crash. You might still find it, but expect to pay significantly more than you would for a conventional loan.

Also, if you haven't noticed, your plan worked out really poorly for many people who tried it. Housing prices go up and down, so if you have 100% financing, it doesn't take much of a swing for you to owe more money than the house is worth. It is a really quick way to bankrupt yourself.

    Bookmark   July 29, 2010 at 11:26AM
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sushipup1

If you are buying a home, find an experienced realtor who knows some good loan agents and start asking your question of the pros. Billl has some good points, and such loans are hard to find, but really, you don't need to ask here, you need to talk to the pros in your own neighborhood.

    Bookmark   July 29, 2010 at 12:30PM
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dave_donhoff

Hi T,

You could functionally get a loan orgainzed to fit your specified needs by going one of three routes;
FHA
VA
USDA

These are not hard to find, but how your loan is structured will matter a great deal. You'll want to shop for a properly skilled & experienced loan professional... it won't matter what company they work for (HOWEVER, you'll be better off, generally, with an originator that works for a brokerage, than a direct retail bank.)

Also, how much of the purchase price you actually borrow is NOT relevant to whether you have future financial troubles. What *IS* relevant is how much you keep in safety reserves ('rainy-day funds.')

IN GENERAL, and at the extremely-skinny very least, I would recommend that you figure out how much reserves you need to have on hand to equal no less than 6 months of your total living expenses (housing, food, transportation, entretainment, insurance... everything!)

*AFTER* you have set that money aside, not to be touched in your home purchase... *THEN* whatever remains is what you can safely use for your home purchase (and yes, then you can go to 100% financing, or "Zero Down" if you qualify.)

AGAIN... RESERVES RULES! Don't do anything until you can proceed with 6 months' total liveing reserves, and without touching them to get the deal done.

Hope that helps!
Dave Donhoff
Leverage Planner

    Bookmark   August 1, 2010 at 11:25PM
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