Home Buying in Brown Deer>Question Details

Kim, Home Buyer in Brown Deer, WI

how can you use up closing cost credit legally?

Asked by Kim, Brown Deer, WI Fri Aug 3, 2012

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Jim Simms’ answer
It depends on the source(s) of the credit. If it comes from the seller the purchase contract may restrict how it is used. Lender credits for rate locks should be used before the seller credits. I advise the selling Realtors I work with on how to word the purchase contract so the buyer can reach the maximum benefit from the structure. Worded properly they could pay for many things not usually thought of in addition to regular closing cost, like FHA Up Front Mortgage Insurance for example.

Credits can be used to pay for home owner insurance, tax escrows, single premium PMI, etc. It just depends on how they are received and what the agreement was on the front end.

The type of loan you use and the amount of down payment can influence the amount of credit received from the seller.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Fri Aug 3, 2012
Closing cost credits are a great way to free up funds without using your own cash as a buyer. Closing cost credits are typically paid for by the seller out of the transaction. For a complete explanation see the web reference.
0 votes Thank Flag Link Mon Jun 1, 2015
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