topic Re: Seller pays closing costs? in Mortgage Loans

Seller pays closing costs?

Anonymous — Tue, 15 Mar 2016 01:26:12 GMT

I just got my VA loan pre-approval, 30 yr fixed rate, no money down but it's contingent on the seller paying about $13K worth of closing costs.

I'm not sure how common it is these days in MD for the seller to pay 100% of closing costs?

My strongest bargaining chip is that the house has been on-off the market for almost 1 year now so the seller may be willing to make that concession

Re: Seller pays closing costs?

StartingOver10 — Tue, 15 Mar 2016 18:21:20 GMT

@AhmedInVA wrote:
I just got my VA loan pre-approval, 30 yr fixed rate, no money down but it's contingent on the seller paying about $13K worth of closing costs.

I'm not sure how common it is these days in MD for the seller to pay 100% of closing costs?

My strongest bargaining chip is that the house has been on-off the market for almost 1 year now so the seller may be willing to make that concession

Every market is different AND in each market there are sellers that are willing to pay some or all of your costs. The more you ask the seller to contribute, the less likely you are to get any concession at all.

Did the pre-approval stipulate that the seller has to pay $13k of your costs? If so, it might be difficult to get that concession. Here there are very few sellers willing to pay that amount in closing costs. Remember, the seller has their own extensive closing costs they have to pay so any payment made toward your costs is a direct reduction of the sellers proceeds.

The property has to appraise for the full amount too. Do you have any funds on your own that you can use toward your own closing costs? After all, most of the closing costs associated with the buyer are mortgage costs - your escrows, your insurance, your title fees, your appraisal, etc. etc.

Re: Seller pays closing costs?

mynameainttracy — Tue, 15 Mar 2016 19:39:50 GMT

With a VA loan there is a 4% cap on sellers concessions.

Your market will dictate whether or not a seller will contribute. With the time on market you mentioned you might have a good shot.

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 00:16:04 GMT

StartingOver10 wrote:

Did the pre-approval stipulate that the seller has to pay $13k of your costs?

yes, the pre-approval letter states that the seller must pay at least $13K in closing costs.

Re: Seller pays closing costs?

StartingOver10 — Wed, 16 Mar 2016 00:43:28 GMT

@AhmedInVA wrote:
@StartingOver10 wrote:
Did the pre-approval stipulate that the seller has to pay $13k of your costs?

yes, the pre-approval letter states that the seller must pay at least $13K in closing costs.

The ONLY reason a pre-approal would state that is if you, the buyer, didn't have the funds to pay for your own costs. That would turn away a certain percentage of sellers.

Do you have the capacity to pay your own closing costs? Or get a quote from the lender on what they would charge you in an interest rate adjustment to pick up $13k of your costs. It will open up the number of sellers willing to work with you.

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 01:13:48 GMT

yes, that is correct. I have about $3K in cash reserves but would prefer to spend that on moving costs.

Higher APR is still an option and roll the closing costs into the loan

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 01:15:01 GMT

a significant portion of the closing costs is county/state taxes

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 02:11:53 GMT

If your in a competitive market, the seller might not pay the closing cost. You can negotiate witht the seller. If the Seller does not want to pay the closing cost, the seller is not required to pay the closing cost. Some VA lenders will help pay the closing cost but you'll have to pay higher interest rates.

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 02:23:40 GMT

yes, it's a bit fo an interesting market area where we're looking to buy.

The house originally listed at $379K on May 2015, it gradually went down in price over time, $369K then $359K, it was delisted during the Winter months then just surfaced back on the market for $349K

I'm guessing seller didn't get many offers so she lowered the price

Comps in that area are fairly close to the current asking price though

Re: Seller pays closing costs?

StartingOver10 — Wed, 16 Mar 2016 11:23:12 GMT

OP, my concern for you would be for the monthly payment. If you have only been able to put together $3000 total cash to purchase a $350k home even if you qualify for the loan it may put you in a difficult spot financially. Won't your mortgage payment be close to $2500 per month including taxes and insurance if you finance $350k?

Re: Seller pays closing costs?

mynameainttracy — Wed, 16 Mar 2016 11:55:34 GMT

We have a VA loan we financed 349k at 3.375 and our payments, with high escrow is about $2100/month.

Do you have any disability rating? If not you will have to pay the funding fee or roll it into the loan as well.

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 11:58:05 GMT

that's a fair concern for sure,, my monthly payments would be close to $1,900 since it's a VA loan, no PMI

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 12:06:38 GMT

@mynameainttracy wrote:
We have a VA loan we financed 349k at 3.375 and our payments, with high escrow is about $2100/month.

Do you have any disability rating? If not you will have to pay the funding fee or roll it into the loan as well.

Zero disability rating for me. I was quoted $357,525 loan (350K plus funding fee rolled into loan) 3.598% APR

Monthly payment breakdown looks like this:

P&I = $1,580

Property tax: $291

Hazard Insurance: $90

PITI comes out to be around $1,962 on the pre-approval letter, am I reading it right?

Re: Seller pays closing costs?

mynameainttracy — Wed, 16 Mar 2016 12:07:35 GMT

Yep, that's about right.

Re: Seller pays closing costs?

StartingOver10 — Wed, 16 Mar 2016 12:11:05 GMT

@AhmedInVA wrote:
@mynameainttracy wrote:
We have a VA loan we financed 349k at 3.375 and our payments, with high escrow is about $2100/month.

Do you have any disability rating? If not you will have to pay the funding fee or roll it into the loan as well.
Zero disability rating for me. I was quoted $357,525 loan (350K plus funding fee rolled into loan) 3.598% APR

Monthly payment breakdown looks like this:
P&I = $1,580
Property tax: $291
Hazard Insurance: $90

PITI comes out to be around $1,962 on the pre-approval letter, am I reading it right?

That's not so bad. I forget that real estate taxes and homeowners insurance are significantly less in some areas. For some reason I thought VA was a high tax state, but it doesn't look that way based on your quote. Naturally your insurance is a small fraction of what we have here....makes a big difference in the payment

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 12:32:11 GMT

@StartingOver10 wrote:
@AhmedInVA wrote:
@mynameainttracy wrote:
We have a VA loan we financed 349k at 3.375 and our payments, with high escrow is about $2100/month.

Do you have any disability rating? If not you will have to pay the funding fee or roll it into the loan as well.
Zero disability rating for me. I was quoted $357,525 loan (350K plus funding fee rolled into loan) 3.598% APR

Monthly payment breakdown looks like this:
P&I = $1,580
Property tax: $291
Hazard Insurance: $90

PITI comes out to be around $1,962 on the pre-approval letter, am I reading it right?
That's not so bad. I forget that real estate taxes and homeowners insurance are significantly less in some areas. For some reason I thought VA was a high tax state, but it doesn't look that way based on your quote. Naturally your insurance is a small fraction of what we have here....makes a big difference in the payment

I should change my handle on here I moved from VA to MD last Summer

VA was cost prohibitive for me, particluarly the Northern VA area so I moved to MD.

Re: Seller pays closing costs?

StartingOver10 — Wed, 16 Mar 2016 12:47:08 GMT

Oh! That does answer why the taxes are so low! I assumed you were in VA and we all know about assumptions.

Re: Seller pays closing costs?

Anonymous — Wed, 16 Mar 2016 14:41:36 GMT

I am extremely grateful to this site also,, I joined about 1 year ago and my FICO score was in the low 600's with multiple open collections,, today my score is in the low 700's and zero open collections which enabled me to get my finances in order and get a VA loan

Re: Seller pays closing costs?

Dook — Thu, 17 Mar 2016 15:52:54 GMT

I can't tell you how your situation will end up, but we have some similarities...

I am also using a VA home loan in MD, and the seller was ok with assisting with 7k of closing costs on a 260,000 dollar home that was on the market for only 30 days approximately. I just now am under contract as of 3 days ago. So our timeframe is the same as well.

I know showings on properties has recently picked up quite a bit in my area, Anne Arundel county.

Obviously there is a decent disparity in price on the houses we are looking at, and you are probably looking closer to the DC market, but that's my experience so far.

Re: Seller pays closing costs?

Anonymous — Fri, 18 Mar 2016 00:10:46 GMT

@Dook wrote:
I can't tell you how your situation will end up, but we have some similarities...

I am also using a VA home loan in MD, and the seller was ok with assisting with 7k of closing costs on a 260,000 dollar home that was on the market for only 30 days approximately. I just now am under contract as of 3 days ago. So our timeframe is the same as well.

I know showings on properties has recently picked up quite a bit in my area, Anne Arundel county.

Obviously there is a decent disparity in price on the houses we are looking at, and you are probably looking closer to the DC market, but that's my experience so far.

Thanks and best of luck to you! I am in Montgomery County