Buying a Home – 10 Things to Know when Make an Offer #5 – Credits
Credits are a very important consideration when Making an Offer on a Home. In our 5th post I will explain Credits to you.
Number 5 – Credits.
Many Home Buyers do not know what Credits are or how they are used. When Buying a Home there are different expenses both on the purchase and on the loan. A buyer can request a credit, generally a %, but sometimes a flat dollar amount on the offer. This money can be used to pay those expenses.
The nice thing about Credits is it allows you to finance part of your home purchase and keep cash in your pocket. Credits work well for First Time Buyers without a lot of cash and they work or Investors trying to maximize cash flow and keep cash in their pockets.
Different Lenders and Different Loan Programs may restrict the amount of Credits you can ask for. I know some will allow credits up to 6% of the purchase price, but 2-3% is more common.
Most Sellers understand this is money coming off the bottom line and will expect your offer to be higher to cover the credit. The problem with this is many homes will not appraise to cover the high offer amount. So credits are much tougher to get in a strong Sellers Market like we have now. Credits can also make your Home Purchase Offer look weak and less desirable.
If you need Credits then you just have to look for the right opportunity. If you don't need them consider the market before requesting them.
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