Monday, November 24, 2008

Can Closing Costs Be Rolled into a Loan?

Here's another question we get asked all the time:

Q: Can loan closing costs be rolled into the loan amount?

A: On a refinance transaction, yes, provided there is sufficient equity in the property. On a purchase transaction, the closing costs cannot be rolled into the loan. Two exceptions to this rule include the up-front mortgage insurance premium for FHA loans and the funding fee for VA loans. It may sometimes seem as if the closing costs are being rolled into the loan on a purchase, but in those cases, the fees are actually being paid by a second mortgage from a down payment assistance organization. If there is no down payment assistance program involved, then the buyer or the seller has to come up with the closing costs.

No comments: