Closing Costs in the Competitive Midland, Michigan Market: It Pays to Be Prepared

Closing costs can be an unexpected expense for the first time home buyer that has not been prepared. Closing costs are in addition to your down payment. Your closing costs can generally be between 2-5% of your sales price. They include items such as loan origination fees, points (if you buy down your interest rate), appraisal fees, buyers title insurance to name a few. Often you will be required to come up with one year of home owners insurance and property taxes at closing as well, in addition to paying out of pocket for a home inspection, and putting down an earnest money deposit upon an accepted offer (which you get back at the closing table)

Should I ask for the seller to pay closing costs?

One option a home buyer has is to ask the seller to include closing costs in the purchase price of the home. Different loan types allow for different percentages of the sales price, and your lender should look at your bank account balances to determine if you have to ask for closing costs or not.

Seller paid closing costs "can" be great for a buyer because its less cash up front. However for a seller, it deducts from their profit or bottom line. If asking price on a home is $200,000, and a buyer asks for 3% back in closing costs, then the offer is really for $194,000. This is why asking for closing costs can also NOT be great for a buyer because it technically makes your offer less competitive and less desirable from the sellers perspective.

The very best option is always to have your down payment and closing costs saved so that if you find yourself in multiple offers or a situation where the seller is unable to accomodate closing costs, you are armed and ready to secure the home.

While it is true that being prepared always puts you in the best position to secure a home, there are several different strategies for making a home purchase work if you have the motivation to put up front the least amount of cash. If this is the case for you, don't let asking for closing costs deter you, however you need to arm yourself with knowledge. Your first step is to schedule a Buyers Consultation and prepare a game plan so I can present you with your options and from there, help you decide what the best strategy is for your situation. My office is located at 6024 Eastman Avenue in Midland, Michigan.

Well informed buyers = happy buyers!

If you have any questions please do not hesitate to contact me. I am happy to help!