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Can anybody Explain Seller Assist in a simple way for buyer?

I have read a lot about it but, still confused !! As a buyer I have a question that, "If I am getting a seller assist and Selling price is Higher means I am borrowing more from the Lender... Don't I pay more interest on the loan as my Loan amount will be more? " For Example, I am buying a house for $185,000 and getting a seller assist of 7400 (4% of Selling price) means $177600 is my buying price (Per agent) But, I am getting a Loan of $178525 (3.5% DownPayment) instead of 171384 ? Is that right or I am just not getting it?
  • October 29 2010 - Reading
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Answers (4)

You're absolutely correct!  However, the upside to "Seller's Assist" is the benefit of including the closing costs, which would normally be satisfied with your cash on hand, within the mortgage.  A small price to pay for holding on to a bit of green.
  • November 03 2010
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It can be confusing.  Best way that i coach my clients to think about it is to not make a distinction between the sales price and the "net or buying" price after the seller assistance.  Just keep in mind what your sales price is and you'll be good.  Same goes with the amount you put down as earnest money.  Seller assist amount and earnest money simply reduce the amount of money you need to bring to the closing. 
  • November 03 2010
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You are trying to apply the seller concession as additional down payment.

Sales Price - 185,000
Down Payment - 6475
Base Loan Amount - 178,525
Assuming an FHA loan, you will add 1785 for the upfront MI so a total loan amount of 180,310.

If the total settlement charges to close this loan including closing costs and prepaids are 7400, then that is where the seller concession is applied. That means you only bring the down payment of 6475 to closing and the seller pays all other expenses. If you had the 7400 and could pay that in addition to the down payment, then you would offer the seller 185K MINUS the 7400 concession so a sales price of 177600 would be used, the seller nets the same amt either way. If you have seen a worksheet for an FHA loan with a total loan amount of 178,525, then the 1% upfront MI is part of the seller concession and not added to your base loan amount.    
  • October 29 2010
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That is correct. You are using the homes value equity to pay for some of your closing costs. This will be reflected in your mortgage amount and payments. With rates as low as they are many people choose this path.
  • October 29 2010
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