To answer your question, a closing cost credit is typically a concession by the Seller to the Buyer.
Your RealtorÂ® or attorney should be able to tell you how much your closing costs are, but considering the Buyer's tax stamps in Chicago in addition to attorney, title and lender fees, your closing costs are certain to exceed $3,000.
I recently had a client who I represented as a Buyer's Agent get a $10,000 closing cost credit when I was done negotiating the sales contract. That was a great help to my Buyer as it reduced by $10,000 what they would have normally had to pay to close on their mortgage.
If your Lender mentioned that there is a $3,000 closing cost credit, that is a good thing for you as a Buyer. That simply means that you will receive a 'credit' of $3,000 at the closing of your mortgage that will offset what you need to bring to closing by $3,000.
Now, if you're the Seller, that means that you agreed to give the Buyer a credit for $3,000. That simply means that your Buyer will receive a 'credit' of $3,000 at the closing and you, as the Seller, paid for that through the proceeds from the sale of your home. That's also a good thing because it helped you sell your home by providing that credit.
Hope that helped. If you have any further questions please contact me directly.
The most common closing cost credit is a lender rebate. Rates are the same every day, but the cost associated with a rate can vary several times a day. When someone says todayâ€™s rate is 4.75% they are typically quoting the "par price" or no fee or rebate associated rate. At the same time the par pricing is at 4.75%, if you were to accept a higher rate, say 5%, the lender would credit you something to your closing costs, a few hundred dollars depending on the pricing. At the same time, if you wanted 4.625% you could obtain this by paying "discount points," again typically a few hundred dollars.
1. Amounts paid to state and local governments.
These include city, county and state transfer taxes, recording fees, and prepaid property taxes.
2.Costs of getting a mortgage.
These include title insurance, survey, appraisals, credit checks, loan origination and documentation fees, commitment and processing fees, hazard and mortgage insurance and interest prepayments.
Total costs you can expect to pay are from 3% to 6% of the amount of your mortgage loan.
Usually you can ask upfront ( while writing the offer) up to 3% credit towards closing costs( used to be up to 6%, depending on LTV of the loan, but I don't think we see it anymore here in CA)
Rusty A. Payton, Broker
5650 N Broadway
Chicago, Illinois 60660
Obviously, your lender would know where it's coming from, and how it got there, so if you'd like to know ... ask him/her.
Did seller offer pay a % of closing cost(s) ? Review your contract
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Americorp Real Estate
Brokers Associate, e-PRO