Seller Paid Closing Costs
The biggest out of pocket expenses when buying a New Orleans home are the down payment and the closing costs.
The required down payment will vary depending on the type of mortgage loan you are using, but no matter what type of financing you choose, closing costs can add up very quickly.
Between the actual costs of borrowing, pre-paid items such as insurance and taxes, and mortgage recording costs, you can rack up a bill that’s thousands of dollars. And all of it is due at the closing table. That can be a big pill to swallow unless your savings account is sizable.
In some neighborhoods, buyers are competing against cash offers, so asking for seller paid closing costs may not be a recipe for success. BUT, in other neighborhoods, there is still the possibility that they will be willing to assist you, provided your offer is strong enough.
What are the limits for assistance?
- FHA cap = 6% of purchase price
- Rural Development cap = 6% of purchase price
- VA cap = 4% of purchase price
- Condo cap = 3% of purchase price
- Conventional cap = 3% of purchase price
- Conventional cap for investment property = 2% of purchase price
In 2014, 26% of single family home sales in New Orleans included at least some seller assistance with closing costs, so don’t be afraid to talk to your lender and your New Orleans REALTOR about how this can work for you.
