Sellers Closing Costs

Sellers closing costs are when a seller agrees to pay some of the costs of the closing. Also they can be called seller contributions. In the beginning this was a practice that started when the buyers did not have enough to cover the down payment and the closing costs. Today, it is being used somewhat as an incentive in a down market. The seller contributions are usually allowed as long as they do not exceed from 3 to 6 percent of the sale price of the home, depending on the type of loan.

When dealing with government loans, the seller may only be allowed to pay these costs if they are non-recurring. The buyer has to pay recurring fees such as insurance and taxes. In a FHA insured loan, the seller can pay up to 3 percent of the costs for the closing. However, the buyer has to put a 3 percent down payment in one way or another. It may be toward the down payment or other items and the money can be a gift from someone or a program that helps to pay down payments and other costs associated with buying a home.

Another type of loan that is available through the VA is the “NO-NO” loan. This means the veteran pays no down payment and no closing costs at all. The seller pays all of the these costs. This is a good type of loan for a first time home buyer.

One of the advantages today allowing sellers closing costs to be paid is the incentive that it provides for buyers. For the first time home buyer who may not have enough for a down payment and the costs for the closing, this can provide a way for them to purchase a home. When the seller picks up these costs, this is an immense help to the buyer to be able to purchase the home.

The closing costs can be quite an extensive list. From fees for copying the seemingly thousands of copies of papers for closing to the more expensive homeowner insurance, these costs can add up. Of course, the sellers have their own fees which have to be paid as well. But with the shape of the economy and the real estate market today, this is the “age of seller concessions.”

In a buyer’s market, the sellers have to agree to many demands to sell their home. Today’s sellers are getting an education on what they must do to sell their homes. Real estate brokers are seeing huge increases in the seller paying mortgage closing costs. The amount and the number of sellers paying more have both risen. Tighter credit restrictions have contributed to this as well.

Some real estate agents say more than half of the deals they are closing today involve sellers paying the closing fees. When the buyers have the upper hand when it comes to buying homes, there will have to be concessions made if the seller wants to move their home in today’s market. Home loan closing costs happens to be one of these concessions.

Irregardless, sellers usually end up helping with these costs even if they do not pay a major part of them. Sellers closing costs is becoming as familiar to sellers as they are to buyers.

Article Source: sooperarticles.com/finance-articles/mortgage-articles/sellers-closing-costs-226137.html

About Author:

Jeffrey Ragan has several years of experience helping people reach their goals and wants to help you learn more about mortgage closing costs and other helpful information on their website, First-Time-Home-Buyer-Solutions.com.Author: Jeffrey Ragan