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Closing cost for usda

Can you roll closing costs into a usda loan? by george82217 from Anderson, Indiana. Oct 25th 2013 Reply


Joe Metzler (JoeMetzler)
#2 ranked lender in Minnesota - 2,486 contributions

Yes, the USDA program allows for "seller paid closing costs", which basically allows you to roll the closing costs into the loan. It has to be part of the purchase offer. It can't just be added afterwards, so be sure to talk to your Real Estate Agent about how this is done, and be sure to talk to your Loan Officer about how much needs to be rolled in. For USDA loans in MN or WI, visit www.MortgagesUnlimited.biz/usda

Oct 25th 2013
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George - great question. As long as the house appraises high enough to cover the difference, you can roll closing costs into a USDA Rural Development loan. Thanks for asking!Dan MoyleAmeriFirst Home Mortgage / Marketing

Oct 25th 2013
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Joe Metzler (JoeMetzler)
#2 ranked lender in Minnesota - 2,486 contributions

... as others have indicated... I need to add to my answer. You CAN potentially add up to 2% after the fact WITHOUT being in the purchase agreement IF the home appraises for more than the purchase price. This doesn't happen very often, and is a big gamble. You are much much better off to safely work it into the purchase agreement rather than gamble the appraisal comes in higher.

Oct 25th 2013
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James Barath (JamesBarath)
#1 ranked lender in Indiana - 337 contributions

The simple answer is yes with some caveats as referenced by the other mortgage professionals. It should also be noted that Indiana USDA RD allows for 100% of the closing costs to be gifted if you have not negotiated them into the purchase agreement.

Oct 25th 2013
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Mike Silkworth (msilkw_195_870)
#31 ranked lender in Michigan - 476 contributions

Yes you can as long as the appraisal is high enough to cover them. For instance, if you offer $100,000 for the home, it appraises for $102,000 and the closing costs are $2,500 - you can only finance in $2,000 worth of the closing costs and have to pay the other $500. The better way to proceed is to build the closing costs into the price you offer and ask the seller to pay them. For instance, if you were willing to pay $100,000 for the home and the closing costs are $2,500 - you could offer $102,500 with the seller paying $2,500 in closing costs. In the second case, the appraisal is more likely to come in at the needed $102,500 because one of the criteria an appraiser uses is the sales price. GOOD Luck!! - I have some great Partners in Indianapolis that understand these loans very well - please let me know if you'd like me to have them get in touch with you = Mike Silkworth 517-489-2328 - msilkworth@unionhomemortgage.com

Oct 25th 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

Sure. If it appraises high enough

Oct 25th 2013
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 4,848 contributions

Since USDA loans will finance 100% of the appraised value plus guarantee fee, then so long as the costs and fees all fall within the 100% then yes.. if not you will have to pay those costs out of pocket.. between the seller and lender, you should be able to get enough credit to pay your costs.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Oct 25th 2013
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Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 1,545 contributions

Normally you should be thinking about both closing costs (lender and attorney/title costs) AND prepaid/escrow expenses which include insurance for the first year and setting up your escrow account for taxes and insurance - but sometimes people talk about closing costs in general meaning both. Usually a good rule of tumb is about 3% total for both, less for a higher priced home but more for a low cost home. I agree with those who recommend making it part of your offer and negotiated price on the home rather than trying to add it in separately - it's "cleaner" that way and easier to make sure the overall transaction works out the way you desire. In some areas it is not very normal for the appraisal to be significantly higher that the home price, but it is very common to negotiate for the seller to pay those costs for you. Talk to your Realtor about how to structure the offer so that the seller pays your closting cost and prepaid expenses.

Oct 25th 2013
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Dave Metsker (DaveMetsker)
#1 ranked lender in Oregon - 2,008 contributions

Fine answers by the forum members.

Oct 25th 2013
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Sean Young (SeanYoung)
#1 ranked lender in Colorado - 684 contributions

Yes, I just did one last month where the buyer actually received his earnest money back at closing because all closing costs were covered. The seller was already paying 2% and the appraisal came in high enough to cover the difference. You can't count on the appraisal coming in higher of course. so you need to be prepared to have the closing costs available. You also have the option of paying a portion of your costs through your interest rate. Talk with your loan officer about your options. Best wishes,

Oct 26th 2013
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