Home Buying in 60656>Question Details

Be.r3alm, Home Buyer in 60656

What is a closing cost credit? My lender mentioned that there is a $3,000 closing cost credit.

Asked by Be.r3alm, 60656 Thu Dec 23, 2010

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FYI, in regards to Tracey's response below, on the west coast they utilize someone called an "escrow officer". That is not common lingo in IL. In Chicago we utilize attorneys and title company closing agents in addition to Buyer and Seller real estate agents.

To answer your question, a closing cost credit is typically a concession by the Seller to the Buyer.

Your Realtor® 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.
3 votes Thank Flag Link Thu Dec 23, 2010
Be.r3alm,

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.
1 vote Thank Flag Link Tue Sep 3, 2013
With the interest rate pricing, a mortgage lender may offer above par or a lender credit with the associated interest rate. This is a credit which will go towards paying the settlement charges, the closing costs and prepaid items for your transaction. The credit amounts will show in box 2 on the 2nd page of the Good Faith Estimate.
1 vote Thank Flag Link Sun Sep 1, 2013
Be.r3alm,
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 today’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 vote Thank Flag Link Thu Dec 23, 2010
Closing cost credit is a credit given to a buyer to help with cost associated with escrow. They include things like title insurance, fees charged by the title company, lender fees, and points on your loan. The amount a buyer pays in closing cost varies. Check with your escrow officer and you should be able to get an idea as to how much your closing cost would be on a the purchase of a particular property.
1 vote Thank Flag Link Thu Dec 23, 2010
It is a credit to a party in a real estate transaction. Pretty self explanatory. We do it all the time as agents with new construction homes and rebates. When buying a new construction home, many agents give buyer rebates. If you do not use an agent, this money just goes to the builder and goes down the drain! Check out http://www.cashbackflorida.com. Get a 1% rebate on any new construction home in the state of Florida.
0 votes Thank Flag Link Tue Jun 30, 2015
A closing cost credit is simply money given from a seller to a buyer at closing. A closing cost credit allows a buyer to avoid using their own cash. By having a seller pay for closing costs it allows a buyer not to deplete their funds when buying a home. A closing cost credit is a great way to pay for improvements in a home that a buyer would otherwise have to pay out of pocket. Utilizing a closing credit does not necessarily mean a seller is accepting less for their home. The web reference provides a very detailed explanation.
0 votes Thank Flag Link Mon May 25, 2015
A credit that can be negotiated where the seller will pay for your closing costs.
0 votes Thank Flag Link Tue Sep 3, 2013
You can divide all closing costs into two basic groups:

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)
0 votes Thank Flag Link Sun Sep 1, 2013
Its FREE MONEY! Your lender is offsetting some of your closing costs by giving you a gift - a credit at closing. The credit will lower the amount of money you need to purchase.


Rusty A. Payton, Broker
iMove Chicago
5650 N Broadway
Chicago, Illinois 60660

773-961-8819 [Office]
773-289-0806 [Fax]
773-682-5210 [Mobile]

e. payton@iMoveChicago.com


http://www.iMoveChicago.com

blog: iMoveBlog.com
0 votes Thank Flag Link Tue Oct 30, 2012
Bottom line is someone is giving you $3000 at the closing to cover some of your costs. Could be the Seller, lender, Realtor. Given the size of the credit, it is probably the Seller. Costs include lender fees, title company charges and posssibly transfer taxes. Ask your attorney who is giving the credit and why, if you don't know.
0 votes Thank Flag Link Sun Dec 26, 2010
I'm just wondering why you would use this forum to ask such a question. Now you've got six different people from four different states, none of whom actually know the details of your situation, but all of whom are basically just guessing at the answer, since a closing cost credit could come from anywhere (Seller, lender, realtor, governmental agency, etc.)

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.
0 votes Thank Flag Link Fri Dec 24, 2010
Your buyers agent OR mortgage broker on represent you . Could be misleading for a virtual professional to render an opinion w/o full review of executed sales agreement.

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
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Fri Dec 24, 2010
Seems like the question has been answered. However, if you negotiated a deal you should know if you asked for a credit or not. If your going to make an offer, make sure your agent goes over the credit with you.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
mlaricy@americorpre.com
708-250-2696
0 votes Thank Flag Link Fri Dec 24, 2010
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