Home Buying in Norton>Question Details

Dawn, Home Buyer in

When buying, is there a limit to how much cash back at closing I can get from seller? I'm in the Boston, MA metro area.

Asked by Dawn, Thu May 26, 2011

Right now, I'm thinking $10K on an offer of $375K. but am curious if there is a cap. I would like to use it for immediate buying needs--closing costs and immediate repairs. I'm planning to put 5% down (~$20K) and do have more liquid cash in the bank if needed . I just would rather keep my existing cash in the bank or emergencies down the road than use it for the immediate needs upon buying the house.

I figure as long as the seller nets out at the desired price, and I'm not going beyond the legal limit, it would be a good offer. Thoughts?

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The seller can not give you anything directly at closing, as mentioned below they can pay for closing cost and prepaid items. The number you tossed out of 10k sounds like it will cover those items and have maybe $4,000 or $5,000 left over. If you use an FHA 203b the lender is allowed to escrow up to $5,000 for repairs and that can come from the seller. The improvements need to be listed in the appraisal with a dollar amount assigned to each. I looked up the FHA loan limits for your area and it looks like most of the area is above $400,000 so that should work also. On this loan you do not need 5% for down payment, can be as low as 3.5%. good luck, hope this helps.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Wed Jun 1, 2011
You can ask the seller to contribute towards your closing costs. The maximum contribution the seller can make will depend on the type of loan (i.e., Fannie Mae, FHA, VA, USDA) that you will use to finance the home. If you are using conventional financing (i..e, Fannie Mae or Freddie Mac), the amount of the seller contributions will also depend on the amount of your downpayment. Speak with your mortgage lender or broker before you make any offers on a house you'd like to purchase.

Sellers can not contribute towards repairs after settlement. The sellers must make any necessary repairs to satisfy lender requirements. If the lender does not have any requirements for repairs, then you will have to negotiate with the sellers to make any repairs you want prior to settlement.

Finally, you can not get any cash back (except your escrow deposit(s)) at settlement. For example, if you negotiated the seller to pay $5000 towards closing costs and needed only $4000, the seller keeps the $1000 you did not spend. Make sure you spend more than the seller's contributions towards closing costs - and yes, you can buy points to lower the interest rate.
Web Reference: http://Lew.BestChoice.net
0 votes Thank Flag Link Wed Jun 1, 2011
Hi Dawn, Why dont you check w/ your mortgage broker to see how much closing costs would be then you could ask the seller to pay for some of or all of your closing costs, prepaids etc. ofcourse this is only if the seller is willing to do this. Good Luck!
Kathy Portway
SUCCESS!Norton
0 votes Thank Flag Link Thu May 26, 2011
Hi Dawn,

I think you might mean "credit at closing to be applied towards closing costs and prepaid items". That would be a maximum of 6% of the purchase price. You will not actually receive any cash back at closing. Your agent will know how to write it up.

Good luck!
0 votes Thank Flag Link Thu May 26, 2011
Cash back? That would be ZERO. Any lender is not going to approve that. However, you can ask the seller to pay for your closing costs.
0 votes Thank Flag Link Thu May 26, 2011
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