Closing Costs - Wrapped into loan?

[Riley Blake]

Hi,

Do people usually pay closing costs out of pocket or is it typically wrapped into the loan? I'm looking to obtain an FHA loan for my first owner-occupied duplex. Also, I've heard FHA requires PMI. Is .5%-1% of the loan a good rule of thumb for estimating PMI?

Riley Blake

[Aaron Taylor]

Originally posted by @Riley Blake:

Hi,

Do people usually pay closing costs out of pocket or is it typically wrapped into the loan? I'm looking to obtain an FHA loan for my first owner-occupied duplex. Also, I've heard FHA requires PMI. Is .5%-1% of the loan a good rule of thumb for estimating PMI?

Riley Blake

 As an FYI those going through loans backed by Fannie Mae, you can only wrap 2% of your house value in closing costs into the loan.  This mostly affects low priced houses under 100k, but it's something to note.  So like if you had a 65k house, you could only wrap $1300 of the closing costs into the loan or something along those lines.  Couldn't tell you the exact guideline, but it's something like that.