Re: FHA Loan - Lender's credit / sellers' concession
01-25-2013 08:25 PM
You find a home for $300,000 and negotiate down to $294,000..... Or pay the full $300,000 and the seller pays $6,000 of your closing costs. Either way the seller gets $294,000. Realtor just writes up the contract this way.
You wualify for 3.5% rate. Lender raises your rate to 3.75% and offers you a credit towards closing costs. The amount they credit depends on the 'yield spread' between those two rates. Sometimes it is a lot and sometimes not so much.
Your lender can quote you both ways on the lender credit so you can decide which os best for you.
If the seller pays? You are(in effect) financing closing costs over the life of the loan)
If the lender credits? You might end up paying MORE in higher interest over time than the actual costs out of pocket. The lender can show you the break even point for that.
* Lending across the entire 'Great State of Texas' (and now Louisiana)since 2004