The Seller contributions are meant to pay for expenses associated with the purchase of the property. These are items covered in your Good Faith Estimate like Origination fees, Title Insurance, Underwriting etc. They can also cover Inspections, Homeowners initial policy and escrows associated with taxes and insurance. The MCC tax credit may also be paid out of this fund. In most cases, unless the home is in the below $80,000 range these items can be covered by utilizing about 3% to 4% seller contributions. This would include a normal 1% origination fee.
Contributions are allowed 3% (new FHA Guideline).
5% down 3% allowed.
10% down 6% allowed.
20% down 9% allowed.
The term that you are using "Concessions" means something different. It is considered that if you are getting a concession from a seller that this is an undue influence to the sale and the loan amount would need to be adjusted downward to cover this discrepancy. If the purchase price was $103,000 and you were getting a 3% down loan your loan amount would be $100,000. If you negotiated a 3% "Concession" your new loan amount would be $97,000.00 and you would need to bring $6,000 as down payment rather than $3,000.00.
If a seller is to participate in the restoration of the home by paying for repairs, those repairs would need to be itemized and competitively bid. The highest bid would be used as the number to establish an escrow account which would be increased to 1.1/2 times the bid amount to ensure that the works gets done in a workmanlike manner. The escrow account is usually administered by the Title Company and will normally last no longer than 30 days after closing. The work should be completed by then. This work is considered part of the total deal and is itemized on the purchase agreement as an integral part of the transaction.
If you want to negotiate the appliances be sure that they are on placed on site prior to closing and include them in the offer. The offer, not the listing card determines the contract.
Hope this helps.
Roger Danielski, Loan Officer
Lake Michigan Credit Union
616-242-9790 x 9275
We are not lawyers, and you would get accurate advice only from a lawyer.
Because we cannot see your purchase agreement, I suggest talking this over with your agent. Refer to specific language within the agreement only. Most information available in the Multiple Listing Service sheet will have a disclaimer at the bottom something along the lines of "all information not guaranteed accurate"
You might want to ask about this program, I was told by a MSHDA rep at Great Lakes Green that this included energy star appliances. You would have to qualify.