If you are a fan of the home shopping shows on TV, you've heard the term, "Closing Cost Assistance", but few buyers or sellers understand what it really means. Here is a scenario to help explain it:
A buyer wants to purchase a home that is for sale for $100,000 but does not have enough cash to cover the closing costs and would like ask for $2,000 in closing cost assistance. The buyer has their agent write a purchase offer for $102,000 with a $2,000 seller subsidy written into the contract.
The seller is still getting the full list price of the house, but at closing the extra $2,000 will go to the buyer's closing costs at settlement.
Why would a sellernotwant to provide a buyer assistance? Well, it may cause a little doubt that the buyer is not financially ready or sound. Especially if they are not putting down a significant down payment. Also, as a seller, you have to be careful that the house will appraise for the higher amount. If it doesn't appraise and there is a finance contingency, the buyer could walk away from the deal and the seller has to start over and put their home back on the market.
As a buyer, you need to know that there are limits to how much closing cost assistance you can ask for based on the type of loan you are getting (FHA vs. Conventional) and the amount of your down payment. Consult with your lender on what they will/will not allow. If by chance the seller's receive more than one offer on the home and one of them asks for closing cost assistance and the other offer does not, guess which one they will probably go with?
Overall, the seller assist can be a useful mechanism to close a real estate transaction but be sure you talk to your real estate agent and your lender before you make or accept an offer with this type of situation.
Author:Julie Bowman Phone: 703-434-9027 Dated: March 20th 2016 Views: 114 About Julie: ...
No matter how much time you spend on researching and educating yoursel
"I'm so thankful for Jason Jordan! I have to say he is patient! And I am determined and stubborn. My fiance and I had a list of standards and requirements for our first home purchase together and I wasn't willing to waiver on any of them. We came close but thankfully our dream house was just around the corner. Jason set up a customized home search for us with our specific requirements on it, which would be sent to us daily, and I would go through them diligently. As soon as we had an official contract on our townhome that we had to sell, I made of list of my top 4 homes I wanted to see. You know what I realized? The house I fell in love with came back on the market! MY DREAM! Now, the other homes were still wonderful and we had yet to see them. Mr Jordan was wonderful and took us through them all so that we could be CERTAIN we felt we were making the best decision. When we walked into our house I knew it was mine! Just felt it in my bones. And it met EVERY SINGLE REQUIREMENT!
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