This is a simple way to conserve your cash at closing. Let’s say you come to an agreement to purchase a property at $400,000. We then say to the seller :we’ll give you $405,000 but you will pay $5000 of our closing costs.” Most sellers will say yes, they still get the $400K. But you will then be adding $5000 to your mortgage, at 4% interest over 30 years, that will add $23.87 onto your mortgage. In 17+ years you will have spent $5000 on your mortgage payment.
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