Author Topic: Help! Seller's closing cost credit question  (Read 399 times)

affordablehousing

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Help! Seller's closing cost credit question
« on: July 09, 2018, 06:16:13 PM »
MMM community, I'm embarrassed to admit that I may have negotiated for too much of a seller's closing credit, and have run out of eligible closing costs to apply it to. Has anyone been down this road before? And could someone confirm that you can't use a seller's credit to pay for prepaid interest or hazard insurance? Any suggestions for a way to "create" an eligible closing cost that has some benefit to us? Is there any resource to look up what a closing credit can be applied to? I'm hearing from folks I can't just get it applied elsewhere in the transaction.

Thanks for any advice.

Fishingmn

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Re: Help! Seller's closing cost credit question
« Reply #1 on: July 09, 2018, 06:43:47 PM »
Best option is to work with your lender to buy down your interest rate.

One other thing I've done (as a Realtor) is to charge my clients a Broker Commission/Admin Fee (I normally don't charge one even though it's common practice here) and then rebate them the fee after closing as a closing gift.

affordablehousing

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Re: Help! Seller's closing cost credit question
« Reply #2 on: July 10, 2018, 12:01:48 PM »
Fishingmn, Thank you! Bam that is a super helpful answer. I'll check to see if we can do that in our market. Thanks!

CptJack83

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Re: Help! Seller's closing cost credit question
« Reply #3 on: July 10, 2018, 07:25:49 PM »
Closing cost credits CAN be used for pre-paids (initial escrow deposit, interest, HOI premium) etc and all costs.  Is your lender telling you otherwise?

What type of loan are you doing?  if it is a conventional the maximum amount is a % based on your LTV.   3% max if you are putting down less than 10% and 6% max if you are putting down more than 10%.

If you have extra credit left over you can always approach the seller and see if they will square up with you outside of closing.  You could also just have them reduce the sale price by the amount of the unused credit, or you can use the extra credit to buy your rate down. 


affordablehousing

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Re: Help! Seller's closing cost credit question
« Reply #4 on: July 11, 2018, 10:58:25 AM »
Thanks, the lender refused, and then was convinced to let me apply it to the hazard insurance, after my learning the input here from the forum! Thanks all, we were well under the percentage limits, it was just a lender being obstinate. This saved us $1000. Much appreciated.