If you have recently purchased a bank owned home or short sale you probably found out that the most the seller was willing to pay was 3% of the closing costs. Gone are the days when you could get all the closing costs paid by the seller because on homes that are in a lower price range 3% does NOT cover all the closing costs.
Sure you can find a regular seller who might pay more then 3% closing costs and there might even be a few banks that will do this, but right now most of the bank owned homes on the market are Fannie Mae, HUD and Freddie mac homes in the Twin Cities area of Minnesota. I don't recall short sales ever allowing more then 3% closing costs. Sometimes they will only pay 1% or ZERO closing costs.
This is something that buyers need to be aware of when saving for a home. If your buying a home for $100,000 and using an FHA loan thus putting down $3500. You will likely still need about $1500-$2000 to cover the pre-paid items and closings costs because 3% or $3000 just does not cover all the costs to close on a home. Prepaid items include tax escrows, insurance for one year up front, and insurance escrows.
There are still Mortgage officers who run the numbers for buyers estimating the sellers will pay ALL the closing costs. However, the chances are the home you like will be a short sale or a bank owned home that will allow 3% maximum on the closing costs.
This does work out fine for someone buying a $200,000 or higher in most cases. Its the lower price homes that the numbers don't work! Minnesota home prices are lower. You can now find a good home for $100,000 to $130,000 in most of the north metro areas of the Twin Cities.
I am happy to help you if you are looking to buy a home! Give me a call!
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