Roll over closing cost with mortgage loan (PMI, real estate, premium)

[transformers]

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

[captain_hug99]

You can ask the sellers to pay the closing costs. Since you are in a buyers market they might.

[VictorBurek]

It will depend on the loan you are doing. If you are doing a conventional loan, you are capped at 95% loan to value so you would have to bring the closing costs to the table. If you are doing a FHA loan you can do a loan up to 96.5%, so you could roll some of the costs into the loan.

[transformers]

Thanks for the suggestions. I dont think I could ask the seller to pay closing cost, because the negotiating time is over...we have signed the contract and also the home inspection stuff. I will consider the conventional vs FHA. But I think FHA doesn't make any sense, since you have to pay some sort of fee or premium.

[chet everett]

The OP, and all other buyers, REALLY ought to have nailed down details about lending PRIOR to making an offer. Should therE be any shortfalls in what the buyer can borrow this deal will fall apart...

As others have said the FHA limit is 1.5% larger than non-FHA rules. Not sure why the OP is worried about premium baked into FHA loans(which is called "mip", generally assessed at .5% rate premium, as well a one and half percentage upfront charge) if they are thinking 95% financing so they are going to be flushing money into the PMI rat hole anyhow...


To avoid PMI (on non-FHA loans) one must put down 20% on the first mortgage and structure financing to match. PMI is set by market, with rates gnerally as high as FHA surcharge. A good real estate agent would have be sure their clients were aware of this.

I don't know what local market the OP is in, but given the potential for declines that we have seen as of late in nearly ALL regions I would be very reluctant to over borrow. Sucks to be upside down, and sucks even more when. You are paying higher rates and PMI fees on top of that...

If the OP has done the comparison and even with the fees this place is cheaper to buy than to rent then more power to 'em, but my fear is that a buyer that is still trying to figure out how to roll closing into the loan, angling fro a situation that effectively would but them underwater from the get go, may not have done as thoughtful analysis of the pro/ cons of this transaction...

[VictorBurek]

Chet, the upfront charge on FHA is now 2.25%. The monthly factor is .55 if ltv over 95% and .50 if under 95%.

[transformers]

Appreciate your opinion Chet. I posted this question, because so many people are giving me different pieces of advice. One of my friends mentioned about getting the closing cost rolled over....I had never heard of that...so thought of posting the question here.
I do have the finances for closing cost and down, so that wouldn't be a problem, but I am trying to figure out if I can save upfront costs.
I live in upstate NY, the market has been stable here, not much foreclosures at all and in the area where I am planning to buy, there at least 4 different large subdivisions with construction going on.
T

[TimtheGuy]

It sounds like you are talking about a purchase, not a refi. The costs can never be rolled into the loan on a purchase. As stated above a seller can pay them, but you can't roll them into the loan.

[transformers]

Ohh.....ok, yes this is a purchase. Then rolling over is out of question. Sorry for wasting everyone's time...I feel like an idiot now.

[VictorBurek]

On USDA you can roll the costs into the loan up to 102% of the purchase price.