With schools out for the summer, the residential real estate market is ready to heat up and there are several programs, strategies and tactics that buyers, sellers, agents and lenders can use to collectively get to the closing table. One such approach involves having sellers pay for a portion of the closing costs.
There are a number of benefits to seller-paid closing costs. The most notable is that it allows buyers to bring less money to closing. When they have the ability to pay less at closing, buyers may be able to qualify to buy a more expensive home. So by giving a little at closing, the seller can often get a higher sales price and more funds in the long run.
At Sanford’s Team Move/OVM Financial Blog notes, it’s important for the buyer, buyer’s agent and mortgage loan officer to be on the same page before an offer is tendered so that seller’s costs are accounted for in the transaction, if that is part of the plan and the offer.
It’s also important to note that each program, such as VA loans, operates under different policies. All parties need to understand the limitations that are present in each, before selecting the best lending arrangement for them and finalizing the purchase contract. For example, on VA loans, sellers are permitted to pay up to 4% of the price of costs for the buyer.
As noted previously, the best policy is for buyers and their agents to begin discussions with the mortgage lender early in the process. The mortgage professional will be the best person to identify all the options and to help buyers pursue the best program and deal structure for their specific circumstances.