Profile picture for yehyaghoneim

Seller credit towards closing costs?

I'm buying a house, where I received an itemized sheet from my lender detaling all closing costs and prepaid items. they are estimated for $6000 including the appraisal and one year of home insurance. I paid the the appraisal fee $335, and I will pay 1 yr of home insurance premium in advance about $850 (not sure exactly)out of this $6000. The seller will credit $4500 "towards closing costs and prepaid items". Now my question is how much us the closing that the seller is going to credit to, is it $4500 (remainder after what I pay before closing) or $6000 (everything including what I pay before closing). I understand that if the closing costs is less than seller credit, then I lose the difference. Thanks
  • May 16 - US
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Answers (3)

Profile picture for toddbazik
If your seller has agreed to credit you $4500 towards "closing costs and prepaid items" then that means anything necessary to close the loan (not including down payment, thats entirely on you).  If it's less than the agreed upon credit, you are correct you lose the difference.  But closing costs and prepaid items can mean a MULTITUDE of things and will almost certainly add up to more than $4500.  You'd be responsible for the difference.  Appraisal Fee, Credit Report Fee, Hazard and Tax Reserves, Insurance Premium, Underwriting Fee, Broker Fee, Origination Fee, Admin Fee, Escrow, Title, Document Drawing, Recording and Messenger Fees etc can all be paid by your seller credit.  Your Escrow officer or Loan Originator can explain all of these fees to you.  If you have more questions, feel free to contact me through my profile and i'll be happy to clarify the jargon for you.
  • May 16
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Profile picture for wetdawgs
If the seller agreed with up to $4500 and your closing costs are $6000, you will pay the difference.   The seller cannot be paying your down payment.
  • May 16
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Generally speaking, your lender expects any seller contributions to be paid towards non-recurring closing costs, so that if your total non-recurring closing costs come to say $6,000 (which would include mortgage fees etc but not things like property taxes or HOA dues), then the $4,500 would be applied towards that figure, leaving you to come up with the balance.
  • May 16
  • 0Yes

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