Question about Closign costs etc on House

[dabrockster]

When a seller offers "Up to 3.5% of closing costs". What do you think this means??


Would you think this would include the "Down payment" for the home?

Say if I am wanting to put 3% down. Could this be used for this? Hence I would not really need to have a down payment.

[TripletDaddy]

no. closing costs and downpayments are not the same thing.

[Green Lantern]

Yeah, what DDD said. A seller's contribution toward closing costs can not include any part of your down payment.

However, there arose a whole cottage industry of "down payment assistance" programs to exploit a little loophole in this rule. In essence the DPA company would provide a grant to the buyer, covering the down payment, and then the seller would make a "charitable contribution" to the DPA company in the exact same amount. Neat and tidy.

[cougjunkie]

Yeah, what DDD said. A seller's contribution toward closing costs can not include any part of your down payment.

However, there arose a whole cottage industry of "down payment assistance" programs to exploit a little loophole in this rule. In essence the DPA company would provide a grant to the buyer, covering the down payment, and then the seller would make a "charitable contribution" to the DPA company in the exact same amount. Neat and tidy.

DPAs are no longer allowed under FHA guidelines.

3.5% has to come from the buyers own funds or a gift from blood relative.

[falafel]

When a seller offers "Up to 3.5% of closing costs". What do you think this means??

This just means that they'll pay your closing costs up to 3.5% of the total loan. If your closing costs are more than the 3.5% figure, you have to pay that.

[Green Lantern]

DPAs are no longer allowed under FHA guidelines.

Yes, a very important footnote!