The hidden evil of Closing Costs

It just kills me to see all of the emphasis put on the down payment. All the top articles in my searches are all about the big down payment. Blah this and blah that. Yes, a down payment will be a big chunk of cash.

Closing Costs are worse.

Closing costs are the devil in the detail of the realty world. No one likes to talk about them. Instead they seem to like springing an extra $20,000+ bill on you. Yes, it is mentioned when you go to get pre-approved, but it's mostly glossed over. Because who dosen't have that extra $20,000+ laying around for house hunting? On top of the fabled 20% down payment?

Doesn't everybody? *crickets chirp in the background*

Yes, people will talk about seller concessions. The TV shows certainly do, almost all of their house hunters seem to get sellers to cover 100% of the closing costs. That sellers will always pay closing costs! Blah, blah, blah!

This is, of course, a very big lie.

See, in New York Start sellers can only pay a max of 6% for closing costs. No more and probably less because even that small 6% can be a lot depending on the price of the house you want.

Think of it this way, 6% of $100,000 is $6,000. So that would be the max amount you could ask them to pay. Assuming 20% down payment, that would knock a $26,000 closing cash cost down to $20,000. If the math works out like that, which chances are it wont.

My goal is to save up as much as possible. I was originally also going to pull $5,000 from my 401k (but now thougs people are flipping around their own rules for what I can & can't take.) to bring my total cash on hand up to $12,000. Add in the $7,500 from the program grant and I will have $19,500.

But!!!

The bank wont do the mortgage unless you have 6-ish months worth of potential mortgage payments saved in the bank. That number gets taken away from what you are bring to this, not from the grant. This is why all the math is very, very muddy and no one wants to put their name on anything in case its wrong.

You really have to assume that you will be wheeling and dealing during the closing processes. This is one of the main reasons you want a great realtor and bank on your side.

In my case I am going to have to find the holy grail of realtors.

Personally I am going to try and find one with a lot of sales with the first time home buyer programs and a lot of experience on top of that. I do not want to be someones first foray into the world of realty. I also need to see about selling some things to bring my cash pool up. All's work in house hunting.