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The problem with bundling in closing costs with the loan are twofold in the current markets:
1- Bundling in means that in order for the lender to lend the money on the property the seller won't be able to get any more than 3% LESS than the appraisal price. Sellers may want to hold out for full appraisal price, and may actually get it in the current market because appraisals are coming in pretty low due to the REO property effects on the market.
2- If you're competing against another buyer who doesn't need to bundle-in the closing costs, they may be able to beat your bid by offering full appraised price AND to pay the closing.
I agree it's great if you can get it, but you might just need to find a particularly desperate seller in a market where there are few competing buyers in order to get away with it...
I was just giving a scenario. In the lower-end price ranges, more times than not, you have to go above the asking price in order to come below it with closing costs. Maybe he wants to do $137k with 5k which means the seller nets $132k instead of the full asking of $135k.
It's the higher price ranges where the sellers have more wiggle room to come off their prices to allow for closing costs. In the lower prices, they go up in price for the same effect.
I got your point. But I am trying to argue the "asking for closing cost is financing for 30 years" "myth". This is just academic! No body knows that until the seller accepts the offer. When the seller accepts the offer with a closing cost some say, in retrospect, the closing WAS financed. What if there were other buyers that didn't get in time their offer to the seller but support the first offer that included the closing cost. Do you still call it the closing was financed or the seller just paid for the closing cost? This is my point.
I was just giving a scenario. In the lower-end price ranges, more times than not, you have to go above the asking price in order to come below it with closing costs. Maybe he wants to do $137k with 5k which means the seller nets $132k instead of the full asking of $135k.
It's the higher price ranges where the sellers have more wiggle room to come off their prices to allow for closing costs. In the lower prices, they go up in price for the same effect.
That was my plan B on a counter offer.
Another question for you. Am I going to be required to pay 6 months of taxes in advance when closing?
Another question for you. Am I going to be required to pay 6 months of taxes in advance when closing?
It depends on your lender. The typical lender will collect January thru the day of closing, so right now that's 6 months in order to establish your escrow account, and then collect another 2-4 months to make sure there are no short-falls at the end of the year. This is YOUR money, just being held by them. It's either you pay it at closing, or you pay it as one lump sum at the end of the year.
BUT, keep in mind that you're not paying all of that. The seller is paying YOU at closing for January through the day of closing. So, instead of you paying 9 months, the seller is paying you for 6 of those months, and you're just paying 3 months.
It depends on your lender. The typical lender will collect January thru the day of closing, so right now that's 6 months in order to establish your escrow account, and then collect another 2-4 months to make sure there are no short-falls at the end of the year. This is YOUR money, just being held by them. It's either you pay it at closing, or you pay it as one lump sum at the end of the year.
BUT, keep in mind that you're not paying all of that. The seller is paying YOU at closing for January through the day of closing. So, instead of you paying 9 months, the seller is paying you for 6 of those months, and you're just paying 3 months.
Thanks again!
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