USDA Loan Closing Costs
As a USDA Loan expert my goal is often to get you to the table with little or no money. There are so many different ways to cover the closing costs on a USDA Loan if you are unwillingly paying them there is a lack of effort on someone’s part.
Here are some of the ways to cover the closing costs for a USDA Loan.
#1. Seller Pays Them – With a USDA Loan the seller is allowed to pay up to 6% of the closing costs which is almost always enough to cover all of them. If not you can combine the methods listed below. Make sure to discuss this with your Realtor before making your offer.
#2. Increase Your Offer – If the seller is unwilling to pay 6% you can increase your offer and request the money back as a seller credit. As an example if the seller is willing to pay 3% (standard) on a $200,000 purchase price (3% of 200k = $6,000) and closing costs are $9,000 you can counter offer $203,000 and ask for all $9,000 in closing. The seller profits the same amount and you dont have to raise the money.
#3 Roll Them In – A unique characteristic of USDA loans are the ability to roll the closing costs into the appraised value. You can roll any legitimate closing costs into the loan as long as the house appraises for enough to cover them.
#4 Lender Credit – One very misunderstood aspect of mortgage rates are that every rate either costs or pays back money to the borrower. As an example 3.5% might cost $798 / 3.75% might pay $200 / 4% might pay $2500 / and 4.25% might pay $7200! It up to you to decide where your priorities are when deciding whether to pay or receive money from the interest rate.
#5 Gift From Family or Friend – You can receive gift funds from family or documented friends.
#6 Combination – Not a Mortal Combat move but a combo of the above options. Combine a lender credit with a gift from a family member and finish them off with slightly higher offer price and receive the credit from the seller.
As stated earlier there is no reason to pay closing costs on a USDA loan if your goal is to come to the table with no money or you simply dont have it. Working with a USDA Loan expert who knows the different angles to get you approved and to the table with little or no money makes all the difference in the end. If you have question or want to obtain a USDA Loan, call 443-624-9398