Question about wrapping closing costs and lien money into a mortgage when buying a house?

Question

We are purchasing a house....and we agreed to pay the owners back taxes when we made a low ball offer. Can we incorporate those costs and the closing costs into the mortgage and not have to pay out cash? How does that work?

Answer 1

You can't.

What you need to do, in order to incorporate it into the mortgage and keep things legal, is to get the sellers to pay the back taxes on the property, and then raise your offer by that dollar amount...that will allow you to roll it into the mortgage.

You can do the same with the closing costs, but the home must appraise to do both.

The only thing that the seller can't pay is any part of the required down payment...so you have to make sure that what you are financing in relation to the selling price meets the LTV requirement for your loan.

Answer 2

Mary B. is right depending on the state laws where you are. The ONLY person that can give you a100% solid answer is the title company that will handle the transaction so have your real estate agent contact them to work out the details and have the lien paid at closing or you call if you are putting this deal together yourself, which is a VERY bad idea. You NEED an expert in your corner to catch the things that you might miss, and this can either be a realtor or a real estate attorney but somebody needs to be looking over your should since you are on here asking basic knowledge questions.

Answer 3

Depending on your credit and q ualifications, it's possible to include these costs in your mortgage, but you'll be paying interest on those amounts for the length of your mortgage--not a smart move. If the house has a lien against it, you cannot put it in your name until the lien is paid and released.

Answer 4

The tax lien is the sellers responsibility. Can the house reappraise at the higher amount which would take care of the lien & closing costs?