Buying A Home
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Excess seller assists. What happens to the money?
I had another post on here asking about opening offers and after talking to the agent and do a little research myself, we came up with $150,000.00 + 6% sellers assists (this is the help get my 20% down to escape PMI) as an opening offer. Well we thought that was a solid starting point I guess we will see when we put in the offer tonight.
Now my question is what happens if the 6% is more than the closing costs? Lets say they take my offer which I know they wont but lets say they do. That gives me $9000.00 sellers assist and lets say my closing costs are only $5000.00. What happens to the $4000.00 left over? Can I write up in the offer that the sellers assist is for closing costs and repairs/upgrades?
Re: Excess seller assists. What happens to the money?
Yes, but I highly doubt the sellers will accept it, or that your lender will allow it.
I'm not expert but it might be better to write in a specific amount to be paid at closing, instead of a percent. I think most contracts says up to 6% of closing so if closing is less than that, they don't give you the extra but I could be wrong. If you made the offer and said $150k plus $9k back at closing, I would assume you would get the full $9k.
I would also recommend calling your bank.
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I'd call your lender or your realtor and see what they say.
The last time we bought, we asked for $6,500 for closing costs (it's normal for the sellers to pay most of the closing costs in my area). It ended up that the closing costs were about $5,500, so they rolled the excess thousand into our pre-paids. The sellers paid our first year of homeowners insurance, the pro-rated taxes, and a few other small things. Their realtor was pissed (she felt that her clients shouldn't have to pay for our stuff and should just get a refund of the $1k), but the sellers were cool with it. They agreed to pay a set dollar amount and did it. They had to calm their realtor down. I was embarrassed for them.
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Thanks for the responce. I had a feeling this was the case.
I've already talked to my lender and 6% is the max I can get but sadly I forgot to ask the question I posted. No worries I'm sure the first offer will be countered but if not I'm also sure the closing will be more than $9000.00.
I'm pretty sure it varies by lender (and possibly, state) but we were told that the seller assist could only cover closing costs, and that if the assist was more than that amount, they didn't have to pay it.
The offer wording will definitely vary based on location. If you're in an attorney state, definitely consult your lawyer otherwise your REA should know what to do.
The house we are buying is $216k and our closing costs and prepaids combined are only $9700 (down payment is not included in that figure because sellers assist cannot apply to that as far as I know).
What are the taxes on that house? The house I am looking at the taxes at $4500.00 which is 1/2 the sellers assistance. Add 1% tax, title search, inspection, garbage (paid yearly here), plus the taxes the seller has paid and it should hit $9000.00 easy.
Our taxes are $4k. Our $9700 total includes title insurance and title services, origination charge, recording and transfer fees, transfer taxes (this is prorated to the date you close), escrow deposit, and daily interest up until the closing date. It also includes appraisal fees and a year homeowners, but i've already paid them cash (they will be removed and our HUD will be adjusted before closing, that's approx $1k).
I'm pretty sure this is blatant loan fraud.
In my experience closing cost credits are written as being given "up to x amount". If the credit exceeds the amount of your closing costs, then the seller's give less credit. You can only receive a credit for up to the amount of your closing costs and no more. Sometimes you can use the excess credit to pay for an upgrade or something but it depends on what your lender allows and how things are documented.