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Voices Member,  in

On a purchase agreement for a VA loan, it specifies an amount the seller pays that the buyer can't. What?

Asked by Voices Member, Sun Feb 22, 2009

What is the amount specified in the purchase agreement that the seller (may) have to pay. Is it a percentage of the selling price? If so, what is the percentage? TIA.

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Lending answer:

I'm not as familiar with VA loans as I am with FHA, but if I understand correctly, the seller is willing to pay some of the buyer's closing costs.

If so, both FHA and VA insurance guarantees permit the seller to pay up to 6% of the purchase price towards the buyer's closing costs. I'm not a Realtor (and thus am not licensed to tell you how to word the contract), but from an underwriting standpoint it is best that the wording of the seller's contribution to the buyer's closing costs be specific on amount (e.g. $4,000) OR maximum percentage (e.g. "Up to 6% of purchase price"), AND that it be specific (e.g. "X amount towards the buyer's closing costs).

Sometimes we'll see contracts in which the seller's contribution is worded as a "seller credit". This isn't helpful since it is not contracted specifically to the buyer' closing costs (ie, it could be a credit for new carpeting for all we know). Be specific.

Another question that comes up is which buyer's closing costs may be paid by the seller. Here's the list (as I recall it):

Payment of the buyer’s VA funding fee.
Prepayment of the buyer’s property taxes and insurance.
Provision of escrowed funds to provide temporary interest rate buy downs.
VA appraisal
Credit report
Loan origination fee (usually 1 percent of the loan - it must cover all "lender" fees)
Discount points
Title search and title insurance
Recording fees
State and/or local transfer taxes, if applicable

PS - Sorry... had to delete and re-post twice due to typos. Good luck with your sale!
3 votes Thank Flag Link Sun Feb 22, 2009
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