Empower your business to close sales in loan agreements with airSlate SignNow

How to create outlook signature

seller credits to the buyer at closing did you know that when you're negotiating with a seller anything is up for negotiation the price closing cost credits that's what we're going to talk about today is how to know how much you can negotiate for a seller to pay essentially part of or all of your closing costs so you can negotiate like a pro I'm Jennifer Hernandez lender since 1995. welcome to my channel if you're tuning in for the first time I'm super passionate about real facts no BS everything mortgage so let's get started closing costs are actually a combination of fixed costs when you're buying a house regardless of the sales price and fixed costs are things like lender fees title company fees government recording fees uh research on appraisal survey I actually am going to put in the description for you a link to an actual Government website called the cfpb the consumer Federal Protection Bureau where they actually talk about closing costs so you can read more up about closing costs so closing costs it's hard to pin a closing cost percentage per se but usually let's say they're anywhere from three to five percent of the house you're buying depending on the price of the house now that can really add up in addition to your down payment so a seller credit can really help buyers get into a home with less money but there are some restrictions that it's really important that you know about so the first section of what we're going to go over is actually the government loans so government loans are those loans that are sponsored by the government which there's three types so there's an FHA loan Federal housing Administration there's a VA loan for veterans and then there's a USDA loan which stands for United States Department of Agriculture so they all have their different restrictions we'll put those links for you resources down in the description as well so FHA and USDA loans both cap the cell dollar credit at six percent the VA loan for veterans caps the closing cost assistance at four percent now it's important to note that a closing cost credit can never exceed what the actual closing costs are so I'm going to say that again and I'm going to give you an example the closing cost credit from the seller and the realtor by the way if you get a realtor credit any credits to the buyer cannot exceed those numbers of the six percent and the four percent that I just gave the example of so let's say that the price of the home is four hundred thousand let's say you're buying a 400 000 home and let's say you're doing an FHA loan the max seller credit is six percent of the price so that's 24 000 that's a lot of money now let's say that the addition of of your closing costs your prepaid expenses which should include like upfront Insurance taxes set up of escrow let's say that all of those things add up to twelve thousand dollars so you've got the twenty four thousand dollar potential and you've got twelve thousand that is the actual you the buyer cannot benefit from that gap of twelve thousand so the seller credit has to match or be less than the actual closing cost so that's really really important to note so next we're going to go into a conventional load so conventional loans are those that are sponsored or guaranteed by the gses government-sponsored entities and those are Fanny named Freddie Mac so conventional loans have some different limits so if you're putting less than 10 percent down so anywhere between three percent as a first-time buyer and nine point nine percent so less than 10 percent down is a three percent max seller Credit Now if you're putting 10 or more down your credit actually goes up to six percent now there's a special bonus waiting for you at 25 percent sent down and you actually could get nine percent credit from the seller so I'll mention again that the credit from the seller cannot dip into your down payment it can only cover the actual closing costs but you can you know in times like when I'm making this video rates happen to be high and there are times when there's buy Downs of the interest rate that are available and that makes sense for the buyer the seller credit can go towards that's a closing cost so it can pay for not only customary closing costs but it can also pay for points what we call Discount or origination fees so actually I've got a video about points what are points I'm going to put that here at the top I'm going to put it on the card about what Mortgage points are so you know if that's that's right for you or not seller credits can actually pay for those which is an amazing amazing amazing bonus it's important to know two types of loans that aren't as common all the time but jumbo loans those are the non-conforming loans that are over the conforming limits those loans are limited to just three percent seller credit and then there's investor loans so if you're buying an investment property it's important to know that two percent is the maximum seller credit that you're able to negotiate so again thank you so much for joining please watch our video at the end of this called a home buying process A to Z thanks for tuning in talk to you soon