Negotiating More Than Sales Price
Friday, July 02, 2010 by Jason Kudary
When negotiating to purchase a home, many buyers focus mostly on the sales price, which is understandable. After all, a home is typically the largest transaction home buyers have been involved with and the price paid is a huge factor in their monthly payment.
However, in addition to negotiating the price of a home, a buyer can also negotiate to have the seller contribute money from the proceeds to allocate towards the buyer's closing costs. This money can be used towards either the reduction of cash required to close and/or a reduction in the interest rate on the mortgage.
It's easy to see the benefits for buyers to have a lower interest rate on their mortgage. However, one aspect of this situation not often considered is that the IRS treats points that are paid up front to lower a mortgage interest rate as pre-paid interest, regardless of who pays the fees. This means that when buyers negotiate to have the seller pay the costs to lower their interest rate, they receive the benefit of deducting them on their income taxes in the year the home is purchased.
By focusing on these terms - and, frankly, opportunities - home buyers can save money both now and over time.
Jason Kudary real estate - Traverse City real estate