Mortgage Closing Costs
VA
You should be aware that VA will not allow a buyer to pay many closing costs on a VA purchase transaction, when the lender is charging an Origination fee to the buyer. This can create issues in getting your offer accepted in a “Sellers Market” as these non allowable charges can add up to thousands of dollars, that the seller will not be willing to pay. The great news is IPM is paid by our investor/lender so we never charge you an Origination fee to create this issue. Contact your IPM representative and reguest a complete cost breakdown. You will see IPM is always in the top 1% of best priced VA lenders in the Nation.
In a Buyer's Market, were the seller is open to paying costs to get a purchase done, VA will allow the seller to pay the non allowable charges and the buyers normal closing costs. Hence the term VA No No, for no money down and no closing cost expense to the buyer. Additionally, VA will allow the seller to pay other amounts for the buyer (bills, collection accounts, etc) up to 4% of the sales price to help the veteran qualify for a VA home loan.
FHA
FHA purchase loans will allow a credit to the buyer from the seller of up to 6% to help pay for the buyers normal closing costs only. FHA will also allow the borrower to accept a higher rate, so that the lender credits them a rebate/YSP to be applied against their normal closing costs. Any credits cannot be applied to the borrowers minimum down payment of 3.5%.
Conventional Loans
Conventional loans for a purchase will allow a credit to the buyer from seller up to:
If a Principal residence or second home:
- Greater than 90% 3%
- 75.01% – 90% 6%
- 75% or less 9%
- Investment property All CLTV ratios 2%
- The lender is also allowed to credit the buyer the same amounts via rebate/YSP to cover closing costs, which would result in a low cost or no closing cost option. Any credits received in excess of the above will result in a dollar for dollar reduction of the sales price/appraised value.
If you want a loan with lower or no costs, we can do that for you. Call us to discuss your many options and the pros and cons of each.
