Closing Costs On AB Loans

Although no down payment is required on AB Loans, still you will have to be prepared to pocket out closing costs on the loan that is likely to cost around 3 to 4 percent of the loan.

However, this situation would be quite different in the case of a AB Home Loan where all your closing costs subject to an upper limit of 6 percent of the loan is allowed to be paid by the seller.  This is a big relief afforded by AB Home Loans to a borrower of AB Home Loans. 

A Hypothetical Example:   Let’s say, you have no funds in your hand to meet closing costs in respect of a mortgage. In this case, you can inform your real estate agent that you could get a AB Home Loan and would require the seller to advance for as many points as he or she could to offset your closing costs; so that your realtor could then proceed to negotiate on your behalf to secure the best possible purchase contract for you subject to the seller being required to meet your closing costs as far as possible.

Here, a “point” is the equivalent of 1% of the loan amount. If the home were to cost $300,000 and the closing costs were to be fixed at $12,000, you would require the seller to pocket out for 4 points (that is, 4% x $300,000 = $12,000).

We could adopt the same example to illustrate the position presuming you had your own funds amounting to $6,000 to advance towards your closing costs. In this new situation you would require the seller to bear only $6,000 of your closing costs that is equivalent to only 2 points.