Tip of The Week: The Seller can give a credit for the Buyer’s actual costs, but the credit cannot exceed those costs. Additionally, the amount of that credit depends upon the type of loan program that the Buyer has chosen. Here are some examples:
FHA LOANS:
• The Buyer must put down a minimum of 3.5% of the purchase price.
• The Seller can contribute a credit toward closing costs for the Buyer.
• The Buyer is limited by law to a six (6%) percent cap on contributions from the Seller and those contributions must be put towards "actual costs" of the loan.
• See the link from US Department of Housing and Urban Development on buying a home by clicking here.
VA LOANS:
• There is no down payment minimum for a VA type loan. The Seller’s contribution or “concession” is limited to a four (4%) percent cap.
• Please notice that with a VA loan the Buyer is not allowed to pay for the termite report, the Seller must pay for this directly.
• See the link from the Department of Veterans Affairs by clicking here.
CONVENTIONAL LOANS:
• When a Buyer is getting a conventional type loan and putting less than 10% down, the Buyers are limited to three (3%) percent cap on contributions from the Seller.
• Again those contributions or credits must be put towards “actual costs” of the loan.
Remember, There are numerous types of loan programs -- so please make sure you have consulted a loan professional before having your agent ask the seller for a credit toward closing costs.
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To learn more about Only Closings and how they can help you quickly close a property transaction, call them at 203-563-9677 or visit them online at www.OnlyClosings.com
*The content within the "Tip-of-the-Week" is strictly for informational purposes and not intended to be interpreted and/or used as legal advice. Only Closings and OnlyClosings.com is a service provided by Tamara L. Peterson Attorney at Law LLC.