The Benefit of Seller Paid Closing Costs
Did you know seller's often pay part or all of a buyer's closing costs and prepaid items? In our Northern Kentucky and Ohio market they do. Now more than ever this can be a benefit to the buyer because we for the time being are in a very different world of pricing on mortgage loans.
In a normal market you have a range of choices when it comes to interest rates, the amount you want to spend and the amount you have available. It typically is not difficult to use something called premium pricing where a lender pays part of the closing costs for a buyer. Simply put a lender can bump the rate up a bit creating a surplus over and above the cost of the par rate and use that surplus to offset some closing costs for the buyer. This pricing does not particularly exist today. It will return surely at some point but for now there is not a lot of surplus.
A seller can pay closing costs and/or prepaid items such as home owner insurance, interest, taxes, etc. for a home buyer. This saves money that the buyer does not need to come up with at closing. The seller amount is limited depending on the loan program as to what percentage they can pay. If the lender does not have premium pricing available taking a hard look at the cash needed at closing is important. Be sure and investigate the cash needed for closing before the contract is agreed to.