Today we are going to discuss whether it is better to pay the
closing costs in cash upfront or to take out a higher home loan. The difference
could cost you thousands.
It’s very common for
sellers to be asked to pay closing costs by the buyers, so keep this in mind.
Let’s say you want to buy a home that’s listed at $100,000 and have made an
offer of $97,000. If you want the seller to cover those closing costs, which
could be up to $3,000 or more, you may need to come up on your offer a little
bit. When it comes to your mortgage, a difference of $3,000 isn’t that big.
It’s a few dollars a month on your payment. However, that $3,000 in closing
costs is cash that comes immediately out of your pocket.
I’m not saying you have
to pay full price just to get your closing costs covered, but if you are going
to have a trade off of a few thousand on your mortgage or a few thousand more
in cash in your pocket, it’s smarter for
you as a buyer to keep that cash in your bank account than it will be to come
up a few thousand on your mortgage. If you can have those closing costs set
aside for a rainy day, you’ll be happy to have it when something inevitably
goes wrong in your home.
If you have any more
questions for us, or are thinking about buying yourself, give us a call or send
us an email. We look forward to hearing from you!
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