In general, most underwriting guidelines allow for the seller to pay a buyer’s closing costs. However, no matter what you negotiate, the amount of the credit at the closing table cannot exceed the buyer’s actual costs.
The following guidelines currently apply:
- 90.01% + 3% credit
- 90% or less 6% credit
- 6% credit
- 4% credit
A seller should not give money back to the buyer at closing for repairs, decorating allowance, new carpet, etc. A closing cost credit is the only way for the seller to give money to the buyer without affecting the purchase price.
If a concession falls outside of these parameters, then the underwriter will subtract the dollar figure from the purchase price and run the loan to value ratio. If the ratio now exceeds the threshold for the loan program, the buyer may need PMI or not qualify for the loan program.
If you have a relocation customer whose company is paying their closing costs, then the amount of the seller concession will be limited. The buyer can not be reimbursed twice.
Closing costs are all of the buyer’s one-time fees associated with obtaining their mortgage. It does include escrows and pre-paids.
Points Tax Service Fee
Appraisal Underwriting & Processing Fees
Credit Report Municipal Lien
Attorney’s Fee Plot Plan
Title search Recording & Courier Fees
Flood Certification First year’s insurance binder
Title Insurance Tax, Insurance & PMI escrows
For More Detailed Information feel free to call or email Tom Coburn, William Raveis Mortgage Broker, mobile: 508-380-7975 email: email@example.com