I asked one of our favorite lenders the question many, many buyers are asking their Realtors: “How much do I need to cover closing costs?” Here’s his answer.
| Purchase Price | Amount to Cover Closing Costs |
| $75,000 – $100,000 | 6.00% |
| $105,000 – $145,000 | 5.00% |
| $150,000 – $185,000 | 4.00% |
| $190,000 – $255,000 | 3.00% |
| $260,000 – $305,000 | 2.50% |
| $310,000 – $359,000 | 2.00% |
Chart courtesy of Andrew Schmidt of WJ Bradley Mortgage Capital Corp.
You can reach Andrew and his team by phone at 480-621-4300 or 4324.
Here’s a slight hitch in your giddyup: most banks will flat out refuse to contribute more than 3.00% towards the buyers’ closing costs. Which is a shame because a lot of cash-strapped first time homebuyers are shopping for homes in the under-$150,000 range.
We know a few tricks to soften ‘em up though.
If you’re a homebuyer who’s Realtor shopping, give us a call. We’ll tell you how we work, and you can decide whether you’d like us to represent you, or if you’d like to use other Realtors. Not ready to commit to a phone call? Read on, click around, you’ll get a feeling for how we work & who we are. When you’re ready, we’ll still be here.
Heather Barr is a Realtor and a happy workaholic. She eats more than someone her size ought to be able, and is a runner as a consequence. Her TiVo's full of spy thrillers, police procedurals and Whedonesque sci-fi.
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@ Artur – that’s traditional wisdom talking, and its truth and longevity are what make it wise.
On the other hand, we’re putting first-time buyers into a home which is twice the size of their apartment, and their all-in monthly housing expenses will be lower. Yes, a major catastrophe will cause them pain (and possibly even a foreclosure), but that same pain (and possible eviction) would be felt with or without the new house.
And, even if prices were to never rise again, they’re now on the path to having a home paid for, free & clear, before they reach retirement age.
Bottom line is that sometimes it makes sense, and sometimes it doesn’t. Each buyer/borrower/situation is unique..
“Which is a shame because a lot of cash-strapped first time homebuyers are shopping for homes in the under-$150,000 range.”
If a buyer is cash strapped for another 3% maybe they should not be buying a home until they have a secure reserve, because $3000-$5000 is nothing. If you don’t have that what will happen when you lose a job or get a pay cut as many will for at least 1-2 more years.