Home Buying in Tacoma>Question Details

Purplegirlnu…, Home Buyer in Chicago, IL

what does 3.5% seller paid closing cost?

Asked by Purplegirlnurse, Chicago, IL Sat Oct 27, 2012

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Sellers are allowed to pay the buyer's closing costs in most transactions. The amount they can pay depends on the type of financing a buyer obtains. In the most frequent example today, an FHA loan, the buyer is required to make a down-payment of 3.5% of the purchase price. They can make more of a down-payment, but not less. The seller is allowed to pay the costs the buyer normally has to pay in order to acquire the loan; those being loan origination fee; appraisal fee, document preparation fee; credit report fee; underwriting review fee; and possibly a few assorted fees each lender has particular to their bank. A buyer is wise to obtain a "Good Faith Estimate" (GFE) early on in the process so they know exactly what they will be charged. Generally, these costs total approximately 3% of the loan amount. With a good understanding of what costs the buyer will incur, they can incorporate these costs into the offer to purchase to a seller, asking the seller to pay this amount "toward" these costs as a condition of sale. Hopefully your agent/broker will cover this again before you make your offer should there be any remaining questions. Good luck to you.
DB
0 votes Thank Flag Link Mon Nov 12, 2012
Purple girl,
Closing costs paid by the seller is another form of discount. If you were paying cash, this wouldn't help you much so you might just reduce your offer by at least the same amount. If you are financing you may not need this much, check with your lender and discuss this with your agent to decide the best strategy.
0 votes Thank Flag Link Sat Oct 27, 2012
Multiply the sales price by .035 and you will have the amount of Seller paid closing costs, they are offering.

Hope this helps,

Josh Barnett, Realtor
Metro First Realty
Web Reference: http://www.1ListingFee.com
0 votes Thank Flag Link Sat Oct 27, 2012
Thank you.
Flag Sat Oct 27, 2012
You want to check with their lender to see what is allowed to be paid. Most lenders have restrictions on what the seller can pay and how much. I would be surprised if they let you pay the full 3.5% for the buyer.
0 votes Thank Flag Link Sat Oct 27, 2012
I am the buyer.
Flag Sat Oct 27, 2012
With this proviso in a Contract; the Seller is stating that they are willing to pay UP TO 3 1/2 % of the Buyer's Closing Costs.

I prefer more verbage, for the sake of communication and to protect my Client.

Good luck and may God bless
0 votes Thank Flag Link Sat Oct 27, 2012
Thank you.
Flag Sat Oct 27, 2012
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