You might want to look for a lender who can offer a lender credit. This will help you offset some of your out of pocket expenses. Good luck.
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Senior Loan Officer
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
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The Seller "pays" closing costs, but yes, the mortgage is higher to include the closing costs.
The entire transaction is a "wash" for the seller...and the seller does NOT pay more taxes on capital gains, the paying of the closing costs zero's out that tax implication.
However, I suspect that you are talking about a "seller concession". This is quite common, particularly with FHA loans when the buyer does not have enough cash to cover the closing costs. The purchase price is "grossed up" (increased) to an amount above what the seller has agreed to sell for. The difference is credited back to the buyer at closing to use for closing costs. The mortgage amount is based upon the the higher price.
Keystone Realty USA
Long Island's Commission Rebate Realtor