Does the loan from a lender also cover your closing cost

Question

Hi when planning on how much I would need to save for my first purchase should I include closing costs or is it paid thru the loan

Ned Carey · Answer

@Oscar Flores it depends on the kind of loan. A hard money lender may or may not. A traditional lender will not pay closing costs. The LTV (loan to value) is the loan amount vs the sale price or appraised price whichever is lower.

Figure about 3% for closing costs but this can vary tremendously. Just the  "Points" on the loan can be 3%. If property taxes are due in a month you will have one months worth of property taxes to pay. If they were just paid you will have almost a year of property taxes to pay. There are may factors which affect closing costs.

Odie Ayaga · Answer

As @Ned Carey stated it depends on the lender and even then it depends on the situation. If you're brand new and short on liquidity the scales might tip towards more likely no and if you're experienced with a track record, money in the bank, and a lender that's able to it may be a yes. Typically in those sorts of cases though you gain one thing and give up another so maybe you lose some funding on the rehab or something of the sort. It's a bit like a new job...if you're fresh out of college with no field experience you're likely in a much worse bargaining position than someone who's been in the business for 20 years and a track record of success everywhere they've been.

Wes Barnes · Answer

@Oscar Flores

Is this for a fix and flip or you personally? Will you be using Hard Money or conventional. Anyway if the house is for you, I would suggest saving up for closing cost or you could ask the seller to cover the closing cost. Doing it that way you may have to increase the purchase price by a couple thousand dollars but you wont have to come out of pocket so much. I hope this helps. Let me know how it goes

Mark Safrin · Answer

If you are going through a HML, it probably doesn't matter.

Since you will likely only be lent a percentage of the purchase, you will need skin in the game. Most though not all of my borrowers want the maximum % of the purchase that I can give them.

Whether the borrower pays the loan costs and the $ he gets from the loan is increased, or whether the loan portion the borrower actually receives is decreased to cover the loan costs, the borrower still needs to cough up the same amount of money down to make the purchase.

Does the loan from a lender also cover your closing cost

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