I bought my first home in my early 20s when I didn’t have a ton of money in the bank, and perhaps the most difficult part of the transaction for me was coming up with what they call the “cash to close.” This is the money you have to bring out of pocket to the closing table in order to close on your new mortgage and buy the home. This money can include several things – your down payment, lender’s fees, attorney fees, and other miscellaneous closing costs, and it usually adds up to several thousand dollars.
Plenty of people have well-paying jobs that allow them to obtain a mortgage but have a hard time coughing up the cash to close. Most people assume that the only options for them are to take money out of their retirement accounts or borrow from a relative, but these options are less-than-ideal, and sometimes they can raise red flags with a lender and delay (or even abort) the underwriting of the mortgage.
What’s a better option? Obtain a USDA loan that requires no down payment. I’ve already written about this loan product here in the “Zero-Down-Payment Mortgages” section, which I would encourage you to read. But even after the USDA loan, there will still be closing costs that will likely add up to several thousand dollars. Is there anything to do about that?
Yes! For starters, you can always negotiate for a large percentage of the closing costs (up to 6% of the purchase price of the home, for USDA loans) to be paid by the seller. Additionally, some homebuilders in the Upstate that are building in USDA-eligible areas have special partnerships with lenders that makes it possible for buyers to purchase brand new construction without bringing any cash to closing. Yes, you heard me right – a brand new home with no money out of pocket.
Don’t give up on buying a home just because you are struggling to save up for a down payment and closing costs! There are several great options for people in your shoes to buy that dream home with no money up front, and I’d love to help you find the best option. Just contact me for more info, and we’ll get started!