I have sat with a selling homeowner while explaining sellers concessions and the comment was "Nobody ever paid for MY closing costs"! Years ago home buyers were required to have 10%-20% down payment went purchasing a home. In recent times, a home can be purchased for 5%, 3.5% and even 0% down. What the buying public doesn’t always consider is that there are costs associated with borrowing money from any ending institution. A cash sale has closing costs that are minimal but there are required fees to be paid by the buyer when obtaining a mortgage. Every lender will charge a processing or loan origination fee. An appraisal will be ordered to substantiate value and clear the property of any serious issues in condition or zoning. A flood zone determination will be necessary. The lender will require a title insurance policy. There is a closing fee charged by the title company in Michigan to execute a closing and most all Real Estate companies charge a processing fee. These fees usually total 3% of the total purchase price. Example: A $100,000 home would cost a buyer $103,000. So if a buyer had a 5% down loan program, on a $100,000 sales price, they buyer needs $5,000 for down payment AND $3,000 in closing costs for a total of $8,000. Closing costs are not "rolled into a loan", they are to be paid on the day of closing. So, how can a buyer come to closing with $5,000 instead of $8,000? Just ask the seller to pay the buyers closing costs! Let's say we have a house listed at $100,000. Your agent can offer the seller $100,000 with the seller to contribute 3% of the sale price towards the buyers closing costs. Really then, the buyer is offering $97,000 to the seller. $97,000 for the house and $3,000 towards buyers closing costs. Get it? The price is inflated, so to speak, and the money is then gifted and/or granted BACK to the buyer towards their closing costs. Most sellers will pay buyers closing costs as long as they net enough in the end. Sometimes that seller with the $100,000 house will accept an offer for $103,000 offer and pay the buyer the $3,000 closing costs! I always prepare my sellers for the possibility of a buyer asking for help with their closing costs. Talk to your Realtor for further explanation of closing costs!
Dealing with Financing
