Help with closing costs and mortgage payments

PAYING THE CLOSING COSTS

There are several ways to pay for closing costs if you don't have any money. Most lenders allow you to receive a "gift" from a relative or friend. Some require written proof that it's a gift and not a loan. Basically, your mom writes a letter stating she is giving you $2,000 so you will move out of her house once and for all and you don't have to pay it back. Lenders require this to be a gift to ensure you are not adding more debt to your load. If it's a personal loan, your debt-to-income ratio will increase, thereby potentially affecting your mortgage loan.

Another way is to work directly with the seller. With a bit of negotiating, you can get some sellers to pay for most, if not all, of the costs. You can also roll the closing costs into the price of the house so that he or she will get that money back when the loan funds. There are numerous ways to work with the seller, and basically, anything goes as long as you both agree on it. For the sake of keeping this simple, I won't get into them here, but will point you to some good programs that talk about this in detail. See Real Estate Links.

So how did I pay for my closing costs? I used one of my handy dandy dependable credit cards, of course! I had relied on it all year to help make my writing dreams come true, why stop now? (If you found this page without following the links from my story, click here.)

Prior to contacting a potential lender, I had taken out a cash advance and put it in my bank account. When they checked my account, it would show that I had the necessary funds for closing costs, which is required by most lenders. That, by the way, increased my debt which could have resulted in a lower qualifying amount, but it was a compromise I was willing to make just to get my foot in the door. I didn't want to ask mom for the $.

The difference I paid in extra interest for this cash advance was offset by the achieving of a goal. This has since become one of my mottos: “How much is your goal worth to you?” In that particular instance, achieving my goal cost $330 in total interest paid to my credit card company ($2K advance x 7% interest x 2 years + $50 cash advance fee) when it was all said and done. Not much when you consider the bigger picture. See A Word About Credit Cards to learn more about this.

PAYING THE MORTGAGE

To help pay my mortgage and HOA (Home Owner's Association dues), which was almost $300 more than my rent combined, I increased the number of exemptions on my taxes (from 0 to 8) so that I would receive more money from my paycheck each month. Our government is very homeowner friendly and offers a plethora of tax breaks for the American homeowner. This allowed me extra cash each month to pay for the increased expenses. It wasn’t really “extra” as I still only made $30K a year, but in terms of the additional physical amount I saw each paycheck, it was “extra” since less taxes were deducted. Had I kept my original pre-homeowner exemptions, I would have received that extra money in the form of a tax refund at the end of the year. I chose to receive a little more each month instead of a lot at the end of the year to help with my monthly expenses so that I could even make it to the end of the year.

This, by the way, is healthy financial planning. Receiving a tax refund at the end of the year is NOT a bonus, it is a repayment of an interest free loan that the government has borrowed from you! Talk to your tax adviser and make sure you claim enough exemptions (whether you're a homeowner or not) to break even at the end of the year. Sure, you won't get that nice chunk in April, but you'll have more to use throughout the year. And why in the world would anyone want to loan the government money, interest free? If you don't need it for your new mortgage payment, put that extra money from your increased exemptions every month into a high interest bearing account and YOU make money from it, not the government. YOU'RE the one working for it, YOU should reap the benefits of it.


	HELP WITH CLOSING COSTS & MORTGAGE PAYMENTS
	PAYING THE CLOSING COSTS There are several ways to pay for closing costs if you don't have any money. Most lenders allow you to receive a "gift" from a relative or friend. Some require written proof that it's a gift and not a loan. Basically, your mom writes a letter stating she is giving you $2,000 so you will move out of her house once and for all and you don't have to pay it back. Lenders require this to be a gift to ensure you are not adding more debt to your load. If it's a personal loan, your debt-to-income ratio will increase, thereby potentially affecting your mortgage loan. Another way is to work directly with the seller. With a bit of negotiating, you can get some sellers to pay for most, if not all, of the costs. You can also roll the closing costs into the price of the house so that he or she will get that money back when the loan funds. There are numerous ways to work with the seller, and basically, anything goes as long as you both agree on it. For the sake of keeping this simple, I won't get into them here, but will point you to some good programs that talk about this in detail. See Real Estate Links. So how did I pay for my closing costs? I used one of my handy dandy dependable credit cards, of course! I had relied on it all year to help make my writing dreams come true, why stop now? (If you found this page without following the links from my story, click here.) Prior to contacting a potential lender, I had taken out a cash advance and put it in my bank account. When they checked my account, it would show that I had the necessary funds for closing costs, which is required by most lenders. That, by the way, increased my debt which could have resulted in a lower qualifying amount, but it was a compromise I was willing to make just to get my foot in the door. I didn't want to ask mom for the $. The difference I paid in extra interest for this cash advance was offset by the achieving of a goal. This has since become one of my mottos: “How much is your goal worth to you?” In that particular instance, achieving my goal cost $330 in total interest paid to my credit card company ($2K advance x 7% interest x 2 years + $50 cash advance fee) when it was all said and done. Not much when you consider the bigger picture. See A Word About Credit Cards to learn more about this. PAYING THE MORTGAGE To help pay my mortgage and HOA (Home Owner's Association dues), which was almost $300 more than my rent combined, I increased the number of exemptions on my taxes (from 0 to 8) so that I would receive more money from my paycheck each month. Our government is very homeowner friendly and offers a plethora of tax breaks for the American homeowner. This allowed me extra cash each month to pay for the increased expenses. It wasn’t really “extra” as I still only made $30K a year, but in terms of the additional physical amount I saw each paycheck, it was “extra” since less taxes were deducted. Had I kept my original pre-homeowner exemptions, I would have received that extra money in the form of a tax refund at the end of the year. I chose to receive a little more each month instead of a lot at the end of the year to help with my monthly expenses so that I could even make it to the end of the year. This, by the way, is healthy financial planning. Receiving a tax refund at the end of the year is NOT a bonus, it is a repayment of an interest free loan that the government has borrowed from you! Talk to your tax adviser and make sure you claim enough exemptions (whether you're a homeowner or not) to break even at the end of the year. Sure, you won't get that nice chunk in April, but you'll have more to use throughout the year. And why in the world would anyone want to loan the government money, interest free? If you don't need it for your new mortgage payment, put that extra money from your increased exemptions every month into a high interest bearing account and YOU make money from it, not the government. YOU'RE the one working for it, YOU should reap the benefits of it.	Read our Owner/Builder Real Estate Blog Click here for FREE info to help you get started in Real Estate!
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