Closing Costs: What Can the Seller Pay on Behalf of the Buyer?

By
Real Estate Agent with Long and Foster REALTORS®, Gainesville, VA VA License # 0225089470

We are in a buyer's market.  Nine out of ten transactions in our area will include the seller paying toward the buyer's closing costs.  As a first-time home buyer, you may not understand how much closing costs run, or what they include.

To begin, closing costs are typically 3% of the total sales price.  This does not include any down payment required by the lender.  If you are purchasing a home for $200,000, you can expect your closing costs to be approximately $6,000.

Closing costs include attorney fees, title examination, recording the deed, title insurance, mortage interest for the current month, taxes, home owners insurance and possibly loan discount points.

The loan program you are using will determine the maximum amount the seller can contribute to your closing costs.  For instance, VA (Veterans Administration) loans will allow a maximum of 4% of the sales price in closing cost assistance.  FHA loans will allow a maximum amount of 6% of the sales price.  Conventional loans, with specified down payments, will also allow 6% of the sales price.  Just because you are permitted through your lender to accept these maximum amounts, does not mean the seller will always be willing to contribute the maximum.

If you are being offered closing cost assistance, per the example above, of $6,000 and your closing costs end up being $5,500, if the additional $500 is not put toward other prepaids, the money will not be, in any way, forwarded to buyer in the form of a refund, check or cash.  That is why a good lender, and a good Realtor, will look to put that money toward prepaying HOA fees, insurance and so on.

If you are ready to make your home purchase, give me a call and we'll get started with your home search.

Chris Ann Cleland, Realtor, Licensed in Virginia, 703-402-0037, chrisann@longandfoster.com

 

 

 

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Topic:
Home Buying
Location:
Virginia Prince William County
Tags:
seller subsidy
closing cost assistance
what are closing costs
how much are closing costs
northern virginia buyers agent

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Rainmaker
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Tom Braatz Waukesha County Real Estate 262-377-1459
Coldwell Banker - Oconomowoc, WI
Waukesha County Realtor Real Estate agent. SOLD!

Chris

With non Fabnnie Mae or Freddie Mac finacing with commercial we can have the seller hold back a second in the form of a second mortgage as part of the down payment. This is put on tittle an we also sross calatorize it on a residence ae well

Tom Braatz

Dec 20, 2008 04:40 AM #1
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Tom:  I don't delve into the world of commercial real estate.  It's an entirely different world. 

Dec 20, 2008 04:42 AM #2
Rainmaker
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Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

You just illustrated why buyers should "not attempt to do this at home" and that a competent realtor is worth every penny, and I underscore the word competent.

Dec 21, 2008 06:27 AM #3
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Chris:  Competent, professional Realtors are worth every penny they are paid.

Dec 21, 2008 12:47 PM #4
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