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  A zero percent downpayment doesn't mean you don't need any money to buy a house. Closing costs will be needed to pay the lender, your, Loan Consultant, and all the various third party vendors whose services were required to close the transaction. What are closing costs? They are costs incurred during the loan transaction. There are two types of closing costs, recurring, and non-recurring. A recurring closing cost is a cost that you will see again and again during your time as a homeowner. Property taxes, homeowners insurance, H.O.A. dues (for condos and townhomes),and monthly interest paid on your loan balance are a few of the things your will have to pay monthly or yearly, some in proration, in conjunction with obtaining a real estate loan either for purchasing or refinancing purposes. Non-recurring closing costs are normally fees incurred and charged by 3rd partys who performed a specific service that was required or needed to complete the loan process. The lender may charge origination, underwriting, processing and various application fees. The appraiser, title insurance, and escrow companys are other 3rd partys that need to be paid. These fees only pop up when obtaining a real estate loan, so you will not be paying these fees monthly or yearly, they are just one time fees in association with your loan. If you choose to refinance your home loan after you purchase your home for the purpose of getting a better interest rate, or taking cash out (increasing your loan balance in order to pull equity in the form of cash out of your home), you will have to pay a new set of closing costs each time, you re-do your loan. When purchasing your home, you must pay the closing costs upfront. When refinancing the loan, you can roll the closing costs into the loan, equity permitting, instead of paying them upfront. When purchasing your home, sometimes the seller of the home you are buying will pay some of your closing costs. The lender will dictate what the dollar maximum the seller can pay toward your fees. The dollar amount allowed will depend on what type of loan (stated income or?) you are obtaining and how much of a downpayment, if any, you are putting toward your purchase. The seller may also increase the purchase price of their home to absorb the fees they are paying on your behalf. If you refinance your home loan, the lender may be able to pay for some of your closing costs as well. The interest rate will be increased to compensate for the lender out of pocket expense if the dollar amount is substantial. If the dollar amount is minimal, (a few hundred dollars) negotiate directly with your Loan Consultant. How much are closing costs? It depends on what lender you are using and the value/purchase price of the home, and the loan amount (s) you need. An average rule of thumb is to use 2.5% of the value of the home to cover all closing costs, so it's not cheap. Don't forget about reserves As covered in the 100% financing section, click here for more information or see the main menu, you may or may not reserves in addition to your closing costs. Call me for details or click here to apply on-line now! Kevin Walton Cell: 805-276-1942  Best Capital Funding - 6930 Owensmouth Ave. #102 - Canoga Park, CA 91303 Office Phone: (818) 887-2779 Fax: 800-506-0632 Cell Phone: 805-276-1942 Best Capital Funding.
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