How much do I pay upfront?

Question

I am a tiny bit confused about what amount is due at the closing of a deal...Example: purchasing a multifamily for $350k.  Is the full purchase price due upfront? or just a down payment and the rest gets paid in installments over time?

David Acosta · Answer

Hey, @Eli Mills - hope all's well.  Closing costs may vary and can include items such as origination fees, recording fees, and transfer taxes.  The full price typically won't be due upfront, just the downpayment, minus your initial earnest money deposit.  This total sum will be based on the LTV.   With multifamily you may also be required to deposit reserves. Hope this helps a bit.  All the best!

Dawn Brenengen · Answer

@Eli Mills Generally, you would put up a small amount at the time you write the contract, let's say 3,500 (earnest money).  Then you do your inspections and other due diligence, and usually about 30-40 days after you initially write the contract you close, which is when title transfers from seller to buyer.  If you are obtaining financing, you would pay a downpayment at closing (usually 25% of the purchase price), and then the rest would be paid over a 30 year timeframe. (monthly mortgage payments)

Eli Mills · Answer

@Dawn Brenengen once again, thanks! That’s what I thought. But now I know for sure.

Dawn Brenengen · Answer

@Eli Mills When you close, the mortgage company that obtain your loan from pays a lump sum to the seller.  So, the seller gets everything at closing, the mortgage company holds the note, and you pay the mortgage company over the next 30 years.

Eli Mills · Answer

@David Acosta thanks for the reply! I understand - appreciate it.

Eli Mills · Answer

@Dawn Brenengen ok thanks for the reply... I had a good idea about everything else you’ve mentioned - was just stuck on the upfront cost. And my other question is: how do the seller get all the money the property is sold for?

(That’s whats confusing me lol if the price is x amount, but I only put down a fraction of that- does the seller only get that fraction amount at closing and then the rest at a later time?)

How much do I pay upfront?

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