Alderine Pol…, Home Buyer in Copiague, NY

When the seller pays closing cost. Is the mortgage higher?

Asked by Alderine Pollard, Copiague, NY Thu Sep 5, 2013

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I'm thinking your talking about a sellers concession which is when you add your closing cost to the actual purchase price that you and the seller agree to but be aware that this could have a baring on your mortgage because it would increase the mortgage and if the house does not appraise for that additional amount the bank might not approve the loan.

Thanks Felix
0 votes Thank Flag Link Thu Sep 5, 2013
Yes for the buyer as a Seller's Concession which means the seller agrees to a lower sales price and the buyer agrees to add this extra cost into their mortgage. But be cautious that it will not Exceed the Appraised amount of the home. If so, it may derail the mortgage approval. It is best that you speak to your lender who is the expert in this matter.
0 votes Thank Flag Link Thu Sep 5, 2013
Yes, your mortgage will reflect those closing costs. Ask your agent and or loan officer for a detailed explanation; a sellers concession occurs when the parties have come to an agreement as to the selling price, but the purchaser is short on closing costs--the seller then concedes to add a percentage to the agreed price, and gives back that percentage at closing to cover all or some of the closing costs--your mortgage will reflect that percentage--therefore, the property must appraise for the higher amount...
0 votes Thank Flag Link Thu Sep 5, 2013
Alderine, if the sales price would be lower if you decided to pay all your closing costs out of pocket, than the answer is yes! You pretty much always pay for closing costs, you either including them into the financing via a seller concession or you're coming out of pocket for it at the closing table.

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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Javier Meneses
Senior Loan Officer
NMLS #23130
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Woodbury, NY 11797
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0 votes Thank Flag Link Thu Sep 5, 2013

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.
0 votes Thank Flag Link Thu Sep 5, 2013
It depends. If the seller is actually paying the closing costs your mortgage will not be higher.

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.

Tom Moser
Keystone Realty USA

Long Island's Commission Rebate Realtor
0 votes Thank Flag Link Thu Sep 5, 2013
Are the costs rolled into the loan?

If yes, then the answer is yes, if no, then the answer is no.
0 votes Thank Flag Link Thu Sep 5, 2013
If the seller is actually paying them out of pocket then no. If you are doing a sellers concession and financing your closing costs then yes, the closing costs add to your overall mortgage amount. This is why the home has to appraise for the additional amount.

0 votes Thank Flag Link Thu Sep 5, 2013
your mortgage is based on your purchase price less your downpayment. So unless you raised to price to include those costs, no your mortgage would not be higher.
0 votes Thank Flag Link Thu Sep 5, 2013
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