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Wheresmine, Home Buyer in Phoenix, AZ

When the seller pays the closing costs, does the buyer get cash back at closing?

Asked by Wheresmine, Phoenix, AZ Tue Feb 1, 2011

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If you are financing the home you are buying, the lender will not let you get cash back at closing. The seller credits need to show on the settlement statement as costs they are paying on behalf of the buyer. Since the lender needs to verify funds to close from the buyer, they will not allow the seller to contribute to the buyer's cash. Hope that makes sense. If you are buying a home with HOA dues, you can have the seller prepay a years worth of those dues if there is extra money not being applied. Hope this helps.
0 votes Thank Flag Link Thu Feb 3, 2011
No, you don't get cash back. All the seller credits are applied ONLY to your closing costs.
0 votes Thank Flag Link Thu Feb 3, 2011
No cash back. A credit is applied to an item to lower your closing costs.
0 votes Thank Flag Link Wed Feb 2, 2011
You can do alot of creative prepaids for example in order to not give the credit back to the seller. Pay for 2 years home owners policy, prepay for a furnace service and have the work done after possession.
0 votes Thank Flag Link Wed Feb 2, 2011
In most cases, no. The credit from the seller usually offsets some of the buyer's closing costs.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Wed Feb 2, 2011
Typically no. Any extra cash (unused credits) would go back to the seller.

One example where you may receive cash back is if you took out a VA loan which requires no down payment. Suppose you gave $1200 earnest money deposit, received a $2000 seller credit for closing costs, and your actual closing costs were $2500. Your costs were 2500, minus your 2000 credit, equals 500 you owe. You already gave a 1200 deposit, so you would receive $700 back at closing.

That is a very basic example. The actual closing numbers will be much more complex. Hope I didn't confuse you. :-)


Mike
mcline@waterstonemortgage.com
0 votes Thank Flag Link Tue Feb 1, 2011
Hello, Just a credit is rececived. Allan
0 votes Thank Flag Link Tue Feb 1, 2011
With all the changes in the mortgage industry, buyers cannot get cash back from the loan. There are cases where an expense such as an appraisal that has been paid up front may be able to be refunded. Always best to go over all costs for an agent and also with your lender.
0 votes Thank Flag Link Tue Feb 1, 2011
Wheresmine,
Generally a lender will not permit cash to the borrower at closing. Your loan officer and agent should discuss what the closing costs will likely be and your offer should be a specific number, $X,000 toward buyers allowable closing costs and prepaids. If the actual closing costs exceed the amount, you'll need to come up with some cash. If there is extra your lender can possibly use the excess to buy down your rate or it would typically be returned to the seller.
0 votes Thank Flag Link Tue Feb 1, 2011
typically no, all needs to be expensed with pre-paids to be in compliance with HUD. Insurance, taxes, points moving expenses - maybe
0 votes Thank Flag Link Tue Feb 1, 2011
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