What exactly is Seller Assist?


Most buyers are very familiar with the term “down payment” and are aware they will need some savings in order to purchase a home.  What some buyers are not aware of is the other costs associated with homebuying.  These costs, including title insurance, lender fees, escrow accounts for taxes, transfer taxes and settlement fees can cost up to 6% of the purchase price of the home.  “Seller assist” is a feature of mortgage loans that is used to help the buyers to mortgage a portion of these closing costs.  Each lender has its own specific guidelines as to how much assistance the seller can provide.  Typically, the amount allowed depends on the type of loan.

For most conventional loans:

  • If the down payment is less than 10 percent, the seller may contribute up to 3 percent of the purchase price.
  • If the down payment is 10 percent or greater the seller may contribute up to 6 percent of the purchase price.

For Federal Housing Administration (FHA)-backed loans:

  • Sellers can contribute up to 6 percent of the sale price.  There is a proposal in Congress to reduce FHA seller assistance to 3 percent, but nothing has been finalized.  Buyers must put down at least 3.5 percent to qualify for an FHA-backed loan.

Here’s how seller assistance works:

Let’s say the buyer and seller agree on a sales price of $100,000, and the buyer’s closing costs are going to be $3,000.  The buyer says he’ll raise his offer to $103,000 if the seller agrees to pay $3,000 in closing costs.  The seller nets the same amount.

The advantage to the buyer is he can finance the closing costs into the loan.  The only catch:  The property has to appraise for the higher amount or the loan won’t be approved.

Your mortgage lender, along with Sean and Amanda, will be happy to explain more about how Seller Assist can help you in your next home purchase!

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