Financing in Maryland>Question Details

Jeff, Home Buyer in Maryland

When sellers say they will pay a certain percentage of closing cost (3%) or a certain dollar amount in?

Asked by Jeff, Maryland Mon Aug 11, 2008

closing cost ($10,000), do the sellers' contribution apply to the TOTAL costs that the buyer must bring to the table OR if sellers say they are paying a certain percentage or dollar amount in closing closts, do the sellers' contribution generally exclude things that the sellers/buyers in MD typically split such as gov't recording and transfer charges, etc.? For example, if a seller says they are giving $10,000 in closing costs and the buyer/seller agree to split the gov't recording and transfer charges, are the recording and transfer charges expected to be included in the $10,000?

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Hi Jeff, it's a simple answer, recordation and transfer taxes are Traditionally split between both parties, therefore the buyers TOTAL closing costs include their share and the sellers contribution is applied to the TOTAL closing costs. What part of Maryland are you in??
0 votes Thank Flag Link Tue Aug 12, 2008
Jeff,

From your question, I think you want to know where the money that the seller has agreed to pay towards closing costs can be applied. It can be applied to any and all closing costs. But only towards closing costs (not your down payment unless it is stated otherwise in the contract). Most loan programs will not allow for the seller to contribute any monies towards the down payment, just the closing costs only. Transfer and recordation taxes are normally split between the buyer and the seller (unless otherwise stated in the contract) in the state of Maryland and are considered part of your closing costs. So, if you are receiving $10,000 towards closing costs from the seller, it can pay recordation and transfer taxes since they are part of your closing cost. That money can only be applied towards your closing costs if it is stated that way in your contract. So, if your closing costs total only $9,600, it is most likely that the seller will only have to contribute up to that amount. If your closing costs are $10,600, you will be responsible for $600 of those costs and your downpayment, etc.

I hope that this helps answer your question. If I can be of further assistance, please feel free to contact me.
0 votes Thank Flag Link Tue Aug 12, 2008
Jeff,
Depending on how the contract is written will determine who pays what. Your 3% based on what you have described will go towards split taxes, prepaids, etc. Basically anything on your settlement sheet up to 10k. If the contract says 3% PLUS seller to pay all recording taxes etc, then that would be over and above and could be more than your underwriter will allow. But whatever you end up paying for, you just get the first 10k towards your closing and you would be responsible for the remainder of your settlement costs.

Hope that helps!

Cheers,
Amanda
0 votes Thank Flag Link Mon Aug 11, 2008
Unless spelled out otherwise transfer tax and recordation charges are split between buyer and seller. So if you get the $10,000 in closing help (your example) it can include your 1/2 of the charges. The other half is a seller closing cost and he would be responsible for his clsoing cost on top of what he is paying on your behalf. Your agent and lender should be able to give you guidance on this.
Web Reference: http://www.kimandrenie.com
0 votes Thank Flag Link Mon Aug 11, 2008
Great question Tom. The contract must be very specific. Typically the split on trnsfer costs are a given, at least in todays market. If they offer 3% above that make sure it is spelled out clearly in the contract. Also, understand that a conventional loan will allow 3% total seller help but an FHA loan will allow up to 6%. If you have a quality real estate agent they will steer you correctly but be certain you ask these specific questions.
Web Reference: http://www.openmortgage.com
0 votes Thank Flag Link Mon Aug 11, 2008
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