Reduce Your Closing Costs Out Of Pockets: Here’s How
Tuesday, June 30th, 2009It’s a buyer’s "make an offer" market. Everyone knows that.
What a lot of buyers don’t know is that if cash out of pocket at closing is one of their impediments to buying, that they can solve that issue in the price negotiation with a seller.
Most lenders will allow a seller to contribute up to to 6% in "seller incentives" to a buyer for approved line items at closing. If a buyer is going to offer a seller a lower purchase price, part of the offer can involve the seller contributing up to the full 6% to the buyer’s costs at closing. In addition to standard closing costs on the transaction the items picked up by the seller could also include points to buy down the interest rate or even a decorating allowance.
If the buyer has not yet selected a lender, a contract addendum could read something to the effect that the seller will contribute 6% of the sales price to buyer’s closing costs in a manner acceptable to buyer’s lender. When the buyer settles on a lender, the lender will tell them what can be paid by the seller per their guidelines, and the closing statement is prepared accordingly.
