Home Buying in Ansley Park>Question Details

Hania Riad, Home Buyer in Atlanta, GA

What can left over money from closing costs go towards?

Asked by Hania Riad, Atlanta, GA Thu Jun 12, 2008

I am closing on a house and the seller is giving a certain amount for closing costs. If there is anything left over, what can I put in the contract to go towards.

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If you are using GAR forms, you will see that the closing costs the seller will pay on your behalf can go to actual closing costs, escrow/prepaid items, downpayment, and discount points. If the amount you think will be a large excess, you should ask your lender - as many lenders will only allow a max of 6% in seller contributions. The rule of thumb is closing costs should be a percentage of financed amount. 2% for over $350.000 - 2.5% $250-300k, and 3% for less than $250k
1 vote Thank Flag Link Fri Jun 13, 2008
Hania,

First ask your agent if the contract allows for the seller's funds to be used for anything other than closing costs. If it doesn't I would get a Good Faith Estimate (GFE) from your lender right away and try to renegotiate the sales price sooner rather than later.

If you can use them for other things that information will also be found in the contract. Typical items are prepaid items (items you pay for outside of closing, eg: homeowners insurance binder, appraisal, etc.) or discount points to buy down your rate. I hope that helps

Cameron Piper
Web Reference: http://www.campiper.com
1 vote Thank Flag Link Thu Jun 12, 2008
Do you have an agent? Have you seen the latest GA Assn. of Realtors contract? Here's what it says...are you under contract using this language?

"The sum of $________________________ to be used by Buyer as a contribution for the items in the paragraph above. In addition, Buyer may use the Seller’s contribution to pay for, including but not limited to, survey costs, appraisals, insurance (including flood insurance, if applicable), inspections, termite treatment and/or repair guarantee and, if Buyer is obtaining mortgage financing, escrow establishment charges, loan discount points, costs to buy down a loan, and other similar costs (unless any of the same are prohibited by Buyer’s mortgage lender). Unspent sums, if any, shall remain with the Seller."

Depends on your particular contract.

Thank you for buying property this Summer!
0 votes Thank Flag Link Mon Jun 16, 2008
You can definitely buy down the interest rate:)
0 votes Thank Flag Link Thu Jun 12, 2008
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