Seller pays closing costs?

[Anonymous]

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

[StartingOver10]

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@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

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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. 

[mynameainttracy]

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.

[Anonymous]

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StartingOver10 wrote:

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

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

[StartingOver10]

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@AhmedInVA wrote:

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@StartingOver10 wrote:

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

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

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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. 

[Anonymous]

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

[Anonymous]

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

[Anonymous]

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. 

[Anonymous]

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

[StartingOver10]

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?