When purchasing a home, not only do you have to pay a down payment, you have to also come in with closing costs. Closing costs can range anywhere from 1-6% of the price of the home. Seller concessions are where you get the seller to pay for some of the closing costs, and can be a powerful way to save on your closing costs.
What are Seller Concessions?
Seller concessions are closing costs that the seller has agreed to pay. Sometimes, you can ask the seller to contribute to specific closing costs. Other times, sellers may just pay a percentage of the total closing costs.
What closing costs do these cover?
- Property taxes: pre-paid property taxes through the end of the year at closing.
- Title insurance: Title insurance protects you and your lender if someone comes forth with a claim for the home’s title.
- Loan origination fees: These origination fees cover your lender’s charges for processing your loan.
- Inspection fees: Inspection fees cover the cost of inspections required for the loan. For example, in some states and on some loans, a pest inspector must evaluate your property before a sale can go through.
- Recording fees: Recording fees cover the expense of documenting your home’s purchase with your local government.
- Appraisal fee: This covers the cost of getting a licensed third-party appraisal of the home to determine the market value.
- Points: Mortgage points (also known as discount points) are upfront interest you pay to reduce your interest rate.
When you apply for a mortgage loan, you will receive a loan estimate from your lender which shows the breakdown of your estimated closing costs. You can then work with your lender and realtor to decide which ones to ask the seller to pay for. Contact us today so we can assist you.