I don't think you seem to have enough of a down payment in the first place. I'd look for a property that you can afford.

5% down but i could go higher financing isn't the problem the appraisal came in less than my offer so clearly i can afford it. I'm not sure what my downpayment has to do with the question? to break it down further the house would cost me 2k more now because there would be no concessions now. In addition to the already 17500 downpayment it is an additional 9k to close so 26500 now instead of 17500 at closing. to go one step further it is a savings of $60 a month over 30 years but at a cost of 9k upfront. The question is, does the upfront cash make this a bad deal now?

Send them a written counter 355 plus 2k for closing and see if they are really willing to lose the deal over 2k.

Sorry if I misunderstood but you did say "my nest egg is drained" and that is not wise, I think, even if you feel you can afford it. That would make it a bad deal for me.

As to the cost over time vs. immediate outlay, you have to consider all the demands on your income over time. Do you have kids to educate? Adequate retirement funding? Good insurance? Some other financial goal, like more education for yourself, replacing or adding a car? Will you have the means to maintain and repair the house? In other words, will you be missing that $9000 in a few years? If not, and you will be likely to stay in the house for 12-15 years, then you will break even eventually.

The mortgage is only part of the cost of your house. You also need to include insurance and taxes when figuring your monthly expenses. If buying a house would leave you with a very tight budget perhaps it is not the right time to buy. If you have to have help with the closing costs the house is too expensive for you. If $60 a month is a problem again you can not afford this house. If you are being given a $1,000 for repairs the repairs will probably be twice that or more.

So many first time buyers and others immediately want to purchase all new furniture but there will be other unforeseen expenses the first year. Are you coming from an apartment or a place where you have never had to maintain a lawn? Some of the basic equipment not counting a lawn mower can easily be almost $1,000.

Either pony up the money or find a different house. The bank is lending you *a lot* of money. They get to call the tune.

Good luck!

OP, I understand where you are coming from regarding the closing costs and wanting the seller to pay for your costs. Those costs are based on the amount you are financing. It costs money to borrow funds from the bank. Having the seller pay your closing costs, in addition to all the closing costs the seller already has to pay, is typical for first time home buyers. There are 3 ways to pay those closing fees: 1) the buyer pays, or 2) the seller pays, or 3) the lender pays. However, if you have the lender pay some or all of the closing fees the lender will increase your interest rate in order to do so. Having your costs paid by the lender is usually a poor option of the 3 choices because you end up paying over the entire term of the loan in the form of a higher rate. The 4th choice would be a combo of any of the 3 choices. You can renegotiate the contract at this stage or cancel. Do what's best for you in the long term.

Having said the above, the others are right. If you are draining your entire savings just to purchase the house you are buying too much house. There are always additional expenses when moving to a new place and unexpected expenses when you own.

You’re already looking at houses above your budget if this is an issue for you. The House note is the cheapest part of home ownership. You also need the same amount of money as your note put away every month for a maintenance account. And a renovation account. Matching funds. And then there is retirement and college finds which need to not suffer from the purchase as well.

With respect, the OP has said nothing to make anyone believe he can't afford this house. The OP only noted that paying 9k more than planned would drain his nest egg. Whether or not the OP should drain his nest egg depends on his specific situation and how fast he can replenish it.

One size fits all financial advice rarely fits anyone well. To even guess at advice I would need salary and expense information, including current housing costs, things about work and risks at work, and overall financial position. There are many financial risks that are worth taking and whether this is one of them depends on the OP's specific situation.

How long do you plan on living in the house, and how long would it take to build up your nest egg again? I think that would answer the question of whether paying the additional $2,000 is "worth it" or not.

Closing costs are 100% buyer costs. They are prepaid taxes, prepaid insurance, interest, funding fees for loans, etc. Not one dollar of closing costs is a seller's cost or obligation, it just has become expected that seller's will pay all or a portion of them for buyers.

Put yourself in the seller's position. They just lost $20,000 in profit. They're probably just as much in shock as you are. They're willing to accept appraised value, and they are also obligated to pay both buying and selling agents' commissions. They just don't want to pay your closing costs (i.e. YOUR interest, YOUR insurance, YOUR funding fee, YOUR prepaid taxes, etc.) in addition.

If the additional $9,000 is going to drain your nest egg or make you unhappy, perhaps you walk away from this deal.