Seller Paid Closing costs is almost becoming commonplace on all new purchases.  Why is this trend picking up across the country?
There are a few reasons:

  • The age old reason was always a house needed a little extra cosmetic work. Instead of having the seller put rugs in, the new buyer might opt to want to make the decision on the colors or different flooring.  Therefore, a credit towards carpet is a quick and manageable way to settle on a price and move forward with selling the house.

  • Lack of funds or just trying to keep more money in your pocket.  The seller concession is now a common way to help with the financing of your new home.  It is a way to “finance” your closing costs in a way.  You can not get money in your pocket after settlement.

  • Buying down your interest rate.  This is a reason a lot of people tend to miss or not know it is an option. But if you have 2% getting paid back to you at settlement this could potentially be used to get your rate down sometimes over ½ point.  You could then go from a monthly payment you were “iffy” with to know being comfortable with.

How Much can be used: A seller can contribute either a percentage or a flat fee towards your closing costs.  These are limited to your type of mortgage and needs to be gone over with your mortgage professional.
Does this work with people who are putting large down payments?  Absolutely, this could be used for someone who has a set amount of money to put down and either doesn’t want to or can’t come up with any other. 
Please send me an email if you want to see what the best use of seller paid closing costs can be used in your situation – jphillips@firstmutualcorp.com.