Can I Finance My Closing Costs - Alexandria VA Homebuyer FAQ

Can I Finance My Closing Costs - Alexandria VA Homebuyer FAQ

Alexandria VA Real Estate - Take a look at the interactive chart below and you'll see that the average sales price for homes in Alexandria VA has steadily increased since January 2012.  In January 2012, the average sales price was $413,701 and in December 2013, the average was $531,191...wow!

Most buyers understand that they will need a downpayment, which can be as low as 3.5% of the sales price for an FHA mortgage, or as high as 20% for a conventional mortgage.  However, many don't realize that there are closing costs in addition to the downpayment minimum when it comes to buying a home. 

In Virginia, it's a good rule of thumb to estimate buyer closing costs to be 2-2.5% of the sales price.  Years ago, there were a variety of mortgage programs that would allow you to finance, or roll in, the closing costs into the total mortgage loan, but new lending rules and guidelines have taken effect, and these programs are no longer available.

Here are two ways to lower your closing costs:

1. Ask the seller to pay some or all of them.  When negotiating the terms of your offer, you can request that the seller contribute a specific dollar amount toward your closing costs.  This does not equate to a check at closing, but will reduce the total out of pocket cash that you will have to pay at closing. There are guidelines in place that will not allow the seller to pay more than your total closing costs, so if your closing costs are $5000 and $10,000 is negotiated, don't expect a $5000 check at the closing table.
2. Ask your lender for a lender credit.  A lender credit will cost you a higher interest rate over the life of the loan, but will offset the total cost of your closing costs.  Your monthly mortgage payment will be slightly higher, but your total cash out of pocket will be lower, leaving you more money for other things such as moving expenses and renovations.