Closing Cost Help, Still Happening?
Back in January of 2010 I did a blog on seller subsidies, also commonly referred to as closing cost help from the seller.
First of all, let’s define a seller subsidy: a lump sum from the seller the buyer may use to pay their closing costs. There is no actual cash exchanged or check written…it appears as a simple line-item in your closing cost statement (known as the HUD-1). Here’s what it looks like:
Back in 2009, about 47% of sales included some sort of subsidy from the seller. They range in amounts, but common subsidies requested by buyers is 3% of the sales price (i.e. $500,000 sale price results in a $15,000 subsidy if 3% is requested. NOTE: This agreement: $500,000 with a $15,000 subsidy is a resulting offer of $485,000!)
This year, about 42% of sales include some sort of seller subsidy towards a buyers closing costs. Down slightly, but nonetheless still relevant, still happening and not at all out of the question.
If you’re thinking of buying and wondering how much cash you need in order to buy, here’s a quick rundown (note: I am NOT a lender and many factors, including past credit history and score will impact your downpayment requirements):
FHA: 3.5% of the sales price + 3% for closing costs
VA: 0% downpayment up to $1M
Conventional: at least 5% down for qualifying purchases, up to $625,500; anything less than 20% will have mortgage insurance, any downpayment will also require an additional 3% towards closing costs
BB&T has a product called a CHIP Loan for First-Time Homebuyers, which will give certain buyers 100% financing (all you’re required to have invested is $500).
Closing costs include (but are not limited to) attorney fees, lender fees, County and State taxes, condo transfer fees, etc.