Questions on Closing

[breakdown1987]

I'll keep it short. I've been on the market for a year now and finally got my FIRST offer accepted. I've literally offered on 30+ homes in the last twelve months but the area I'm looking at is very competitive and everything is going over asking price.

Here's my situation. I'm trying to get avoid PMI at all costs and in order for me to do this I literally have to put down almost everything I have saved (today). My question is how much can I expect to pay in closing costs in California on a 250k home loan. Also can I add the closing costs to the loan? If so what are the advantages and disadvantages?

It sounds risky, but by the time we close I should have at least 5-10k saved up and have two more bonuses coming in this year.

[StartingOver10]

For buyers' closing costs, there are only three possible solutions for payment:

1) the buyer pays them

2) the lender pays a small portion

3) the seller pays a portion.

I assume you are looking at a conventional loan, not FHA, right? Because if you are looking at FHA you have MI regardless.

So conventional loans have a maximum allowed contribution by the seller of 3% of the purchase price. Closing costs and pre-paid expenses average approx 3-1/2% to 4% of the purchase price (check your GFE), so you would be responsible for the amount above the amount you negotiated in your written contract. If you didn't negotiate a seller contribution in your written contract, then the seller can not contribute.

The lender can contribute a small portion by bumping up the interest rate for the life of the loan. That is not generally a wise way to handle it as you are paying a higher interest rate for the entire time of the loan just to cover the one time costs due at closing.

[HouseBuyerGuy]

Is that 5-10k saved up after down payment? Because there is no way that is otherwise enough...