Roll the Closing Costs into the Loan ??

Question

Can you roll the Closing Costs into the Loan , when Purchasing an Investment Property ?

I guess this would depend if the Seller is willing to do so ? Or is it at the discretion of the Lender ?

Thanks much

Jeff B. · Answer

Rolling costs into the loan is an expensive MISTAKE - - you are then going to pay the principal rate of interest on those costs until the load is paid or refinanced.  The best choice is pay those at closing.

Michael Dunn · Answer

Great information ,thank you both

Chris Mason · Answer

Hi @Michael Dunn,

Trick is to offer to have your 'contract price' be a bit higher than the 'net price,' and ask the seller for a closing cost credit. It needs to appraise for the 'contract price,' so this only works if you are getting a fair deal & doesn't work if you are overspending to begin with.

Whatever your LTV is, that is how much of that delta you are financing.

William Murrell · Answer

Sometimes you can depending on the loan.  There's an FDA program that allows for almost no money down which lets you roll almost all of the closing costs into the amortization of the loan.  That's for owner occupants only though, as far as I know.

William Murrell · Answer

I re-read what you said.  You mentioned "if the seller is willing."  Are they offering seller financing?  If so, then you can put whatever you want in it because they're carrying the note.  If you can get them to agree to it, you can roll "one briefcase full of cash from the seller" into the note if you want.  You'll just have steeper debt service going forward the more  you put in upfront.

If you're trying to just go the more conventional route for financing and use a bank, then you're at the will of the underwriters as to what they'll allow you to put in the note.