When purchasing a new home you should be aware that there are various ways to reduce your out of pocket closing costs. I'm often asked by consumers if closing costs can be financed; the answer is yes and no. On a purchase transaction, you cannot increase the loan amount to cover the closing costs, but there are 3 ways you can pay for them.

On a Purchase transaction, there are 3 ways to pay closing costs:

1) Pay for them yourself at closing.
2) Obtain a seller credit or concession for the closing costs. Have your RE agent help negotiate this.
3) Your mortgage lender can credit your closing costs which is offset by you taking a higher than par interest rate. This is referred to as "premium pricing". Ask your mortgage lender about this option and make sure you compare since the amount of credit available to you will vary with each lender.

If you are refinancing your current mortgage you may:

1) Pay for them yourself at closing.
2) Your mortgage lender can credit your closing costs which is offset by you taking a higher than par interest rate. This is referred to as "premium pricing". Ask your mortgage lender about this option and make sure you compare since the amount of credit available to you will vary with each lender.
3) Increase your loan amount to cover the closing costs and finance them.

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