Can I roll my closing costs into my loan?

Can I roll my closing costs in to my mortgage? Borrowers ask this question all the time. The answer to the queston is maybe. Usually in purchase transactions it is not allowed unless a lender is offering a 103% or more Loan to Value loan programs. Rolling in closing costs during a refinance transaction happens a majority of the time because the homeowners can use their equity to pay for the cost to refinance.

Though you can't always roll closing costs into a purchase loan, the seller is allowed to pay 3-6% of the buyer's closing costs in most cases.

Some mortgage brokers can provide a rebate in exchange for a higher interest rate. This can be useful becasue it can reduce the amount of cash needed for closing costs when a seller concession is not available or is not sufficient. Be sure to consider the higher interest rate will apply for the life of the loan.

Closing costs can generally be rolled into refinance loans as well, so that there is no out of pocket cost to take cash out or lower your monthly payments.

Closing costs can vary and some lenders will allow sellers to pay all costs associated with closing your loan, and some will only allow the sellers to pay non-recurring closing costs. Be sure to ask your broker which closing costs can be paid by the seller.

If the seller offers to pay for your closing costs on your purchase transaction, be sure that the total sales price does not go above the listign price. If so, the seller's concession may not be allowed.

Always be sure and inform your realtor that you want seller paid closing costs before any offers are made on the property. And make sure that your mortgage broker gives you an accurate estimate of the fee;s that need to be paid so you will know how much to ask for.

» DISCLAIMER: The information contained in this article on 'Can I roll my closing costs into my loan?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.