Closing costs "covered"

[Jason Monge]

Hi everyone, I was wondering if you guys and gals could please give me any feedback regarding this topic? A realtor and a mortgage company have told me that all of my closing costs can be covered at my closing. Basically they use a strategy where the sale price is agreed to by myself and the seller. Then during the appraisal process, they get the appraiser to say that the home is worth more than the agreed upon amount. This allows me to then receive the extra funds from the bank and use it to pay for my closing costs. Is this a legit process? Has anyone else done this? Does this sound like a good idea? Please lmk, this will be my first home purchase and I'm trying to be as strategic as possible. 

Thanks

BPJ

[Bill B.]

None of it should be done behind anyone's back, nor will they be able to "convince" the appraiser it's worth more. The most acceptable way to do it is to offer more than asking (I BELIEVE 2% for a convention mortgage or 6% for an FHA mortgage) and then ask for that much in closing. Obviously the appraiser will see this and it will be up to them to determine if the home is worth the Iarger amount. If that 2-6% is enough to cover your closing costs then yes.

But don’t forget, with 6-10% in closing costs to sell you’re going to be upside down in your homes for years. Plan on staying 5 years just to sell and walk with nothing. Any earlier and you’ll have to pay to sell.