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Is it true that new home builders can only contribute so much financially towards closing and the loan itself (buydowns)?
With the market being as it is, I was wondering what I could actually go for and know that legally it can be done -
for example,
4% towards closing costs
rate buydown (is there a limit of how low it can go)
prepaid property taxes and maybe HOA - I know this is being done in Florida as a former neighbor just did it after moving there).
I am in Maryland and I want to move into Montgomery County.
Given there aren't many lenders left today, 3% is the norm being seen in todays market. This would include all incentives given to you by the seller or developer. You need to add up all incentives to determine, and of course your mortgage professional would tell you if its going to be 3% or 6%. There are ways of getting your full percentage in the event the lender caps you but the title company would need to work with your mortgage broker on that.
Here's the thing..... If Anyone gives you Back money in the form of Any pmts made for you, that means they are Acknowledging that the home is worth LESS than the purchase price.
Consider this: I have a house and sell it to you for $200,000 but I say, "I'll give you Back (goodies) that are worth $30,000. That means 200 - 30 = $170,000 Might be the home's Cash Equivalent Market Value. Watch Out though b/c if those goodies are Only for Me, then the seller Just Got $30k from me and I have the Debt of that Plus the true value/sale price to pay.
Please Don't fall for BS - why do you think so many homes in Foreclosure? Right, that same crap. Don't fall for it. Pay rent for now til things shake out.
Check out housingbubblecasualty.com - and also nytimes.com/interactive/2007/08/25/business/ (housing graphs showing the history of past few years, and Adjusted for Inflation - really shows bubbles - if you are NOT in one (rare) you May be ok but Get Educated Really Well First and get opinion from Very Experienced (only 15 Yrs Plus) Experienced Appraiser of your OWN. Why spend $350 to save possibly $20 Grand, I dunno. Just seems a good idea to me!
Doreen Campbell my site is CampbellAppraisal dot com
Here's the thing..... If Anyone gives you Back money in the form of Any pmts made for you, that means they are Acknowledging that the home is worth LESS than the purchase price.
Consider this: I have a house and sell it to you for $200,000 but I say, "I'll give you Back (goodies) that are worth $30,000. That means 200 - 30 = $170,000 Might be the home's Cash Equivalent Market Value. Watch Out though b/c if those goodies are Only for Me, then the seller Just Got $30k from me and I have the Debt of that Plus the true value/sale price to pay.
Please Don't fall for BS - why do you think so many homes in Foreclosure? Right, that same crap. Don't fall for it. Pay rent for now til things shake out.
Check out housingbubblecasualty.com - and also nytimes.com/interactive/2007/08/25/business/ (housing graphs showing the history of past few years, and Adjusted for Inflation - really shows bubbles - if you are NOT in one (rare) you May be ok but Get Educated Really Well First and get opinion from Very Experienced (only 15 Yrs Plus) Experienced Appraiser of your OWN. Why spend $350 to save possibly $20 Grand, I dunno. Just seems a good idea to me!
Doreen Campbell my site is CampbellAppraisal dot com
This is not always true, builders offer these deals to spur sales. they have you go through there mortgage co to get the deal, so they get some of the money back, just filtered through one of there co. They could probably take 30 gs less for the house but will that spur sales? or just make home values in there community go down? Most buyers like not paying the closing fees you save that money instead of throwing it away never to get it back, if you get the house 30 gs cheaper you still have to pay closing costs and your throwing that money away. If the builder pays cc on the houses your house will appraise what the rest are selling for.plus some people just dont have the cash for ccs but they have a down payment, this lets them own a home instead of throwing money away on rent for years trying to save another 30gs . So if people want to own a home and live in it for 10 + years these are great deals the slump will turn eventually and houses will go up again at 5% a year wich is normal.
The 3%, 6% and 9% figures posted earlier (depending on your down payment) are correct however, keep in mind that if the actually closing costs and prepaids amount to less than the applicable percentage than the builder/seller is not allowed to credit that cash back to the buyer at closing nor are you allowed to use that surplus towards your down payment...I originate loans in Montgomery County and the builder would be allowed to include the annual property tax (though many homeowners pay bi-annually in our county). Also, the surplus can be used to buy down the interest rate with a temporary or perm. rate buydown...finally, you can always ask the seller to include finishing the basement or other options if you are trying to negotiate more but once again, no cash can come back to you at the table.
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