You have decided to buy a home and have saved up money, now what? You think about the down payment but did you remember closing costs? In most cases you need 3-5% down to buy a home for the down payment. But there are also other costs, closing costs, inspections and prepaid expenses.
One way to help cut the overall cost is to ask the seller to contribute to your closing costs. Depending on how long the home has been on the market, the number of offers and what the home is worth, you may be able to get the seller to contribute towards your closing costs. Usually they won’t contribute more than 3% and depending on your down payment, that may be the most they can contribute.
Using seller contributions can lower the amount you need at closing. It can also help to buy down the interest rate or possibly help finance a temporary buydown. If your inspection comes up with items that you need to fix, asking the seller to contribute to closing costs can help. If you want to lower your payment, it may make more sense to buy down the rate rather than lower the sales price. Using seller paid closing costs can help you buy down the rate.
Talk with your real estate agent about options and if getting seller paid closing costs might be possible. If the home has been on the market for awhile, it may be easier to get the seller to pay closing costs. If the home just came on the market, you may have to increase your offer to get the seller to contribute to your closing costs.
Look at your finances, talk with your real estate agent and your loan officer and see what makes the most sense for you.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
