when u buy a house, say 400,000 and u borrow 100% a?

Question

80% first loan and a 20% second loan so theres no PMI, and u JUST made the income to debt ratio on the loan itself ( i have no credit debt or other loan debt and my credit score is above 750) and even though im not putting any money down ( i dont have any to put down) if i JUST made the debt to income ratio to be approved for the loan.....where do i get the money to pay the 10,000% closing cost, and escrow cost..... do sellers always pay all of it? what if the buyer doesnt want to pay any of it, or he only pays the (MINIMUM possible on his part.) it seems like alot of people can barely afford a house with no downpayment.....but even thought they are appoved based on the lenders debt to income ratio.....the taxes, home owners insurance, AND the closing cost.....now made it immposible to play. if i payed 10,000 for the closing cost, and the how ever 1,000's$ on taxes....then i dont make enuogh for the mortgage paymesnt that year...beciase the closing cost is soo high.

Answer 1

You can get 100% loan, but there are closing costs - however, you can also get a loan for over 100% - some up to 107%. 10% in closing costs seems very high for someone with good credit and stable, verifiable income that qualifies. Paying for the cloaing costs does not decrease your income for that year, that is a one time expense and does not affect your debt-to-income ratio.

Most people negotiate with the seller to pay all or some of the closing costs. Most lenders allow for them to do this up to either 3% or 6% of the purchase price. The seller does not have any out of pocket expense so usually is game for the practice. Instead of negotiaing the price down by another $10,000, negotiate to keep the price the same with the seller paying the costs - same thing to the seller!

Last - you need a good mortgage broker. If you have one now, either he is not very good, or you're not listening to him. Unless you are very experienced with loans, let the mortagge broker tell you what is best once he understands your position. By trying to tell a broker what kind of loan you want, you are limiting yourself. Most real estate agents get this mixed up also, they try to dictate mortgage with teh buyer and the mortagge guy - this is backwards and you should not listen to the agent as much as to the mortgage broker. Agents only know some of lending - the very basics.

Sorry agents, but it's true. I've seen too many times when the buyer got a lot worse than what they could have because of bad advice from their experienced Realtor.

Answer 2

First - 10% closing costs to the buyer seems very high. Run those numbers by someone who is not getting paid in your transaction.

Now, to answer your question - You can negotiate to have the seller pay the closing costs. The seller is not obligated to make this payment.

Also, you might consider getting a single 100% loan with PMI. The rules have changes significantly, but most loan originators are late to the party. PMI is now a much better choice in a lot of situations, as you can get a fixed rate on the full loan, finance the PMI, or have the seller/lender pay for it. (In fact, when your lender said there is no PMI on your loan, they were not telling you the whole story. In fact, they will be purchasing the insurance on that loan. The lender has rolled that amount into the interest rate on the second. That's one of the reasons the second carries a higher rate.) Plus, now that it's tax deductible, the net is lower on getting PMI. Finally, PMI can be canceled, where a the adjustable rate on your second is for the life of the loan and will probably go up.

If you go the PMI route, you can roll the closing costs into the loan and get a 103% loan. If you are income-eligible, or are purchasing in a neighborhood that qualifies, you may be able to get a Fannie Mae My Community Mortgage or Freddie Mac Home Possibles Mortgage. These products go up to 105% LTV - lots of room for closing costs - and have very low insurance rates. Ask your loan originator.

Finally, there are downpayment assistance programs, such as Nehemiah, which can help you with the downpayment. Check out www.getdownpayment.com for more information.

Answer 3

In my marketplace, it's not uncommon to ask the Seller to pay a percentage (commonly up to 3%) of the Buyer's "closing costs and/or prepaids". That is a very common Seller Concession. However, you may have to adjust the purchase price to satisfy the Seller... it's all a part of your negotiation.

With a 750 fico score, I cannot understand why you would not be able to get the loan, as that is a near perfect credit rating!

Regardless though, after all is said and done, you have to be comfortable with the monthly burden (Principal, Interest, Property Taxes, and Insurance). And, if that is stretching your monthly budget, as painful as it may be, lower your sights on what you're looking at.

Just food for thought.

Good luck.

Answer 4

This is why I always advise my clients, when purchasing a house, get the seller to pay closing costs. They can be pricey, especially on a $400k purchase, and you can usually get the seller to agree to it if you agree to a slightly higher price. That's pretty much the only way you can get into a house with no money down, and it's the most often overlooked issue on a purchase agreement, but at the same time one of the most important issues to take care of.