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Emergencies, Appraisals, & Final Walkthroughs Can Sideline Real Estate Deals. Save Them With This.

Mike Chissell, Trusted Mortgage Advisor • Aug 11, 2021

Imagine that you are in the process of buying your new home. Everything is on track. You are excited, but then life happens. You experience an emergency or unplanned expense. After covering the expense, you are short on cash to close. The house is The One, and you will lose this opportunity because of a couple thousand dollars. Not having enough money to close may seem like a nightmare, but it's not. We have solutions to help get your deal done.

Imagine that you are in the process of buying your new home. Everything is on track. You are excited, but then life happens. You experience an emergency or unplanned expense. After covering the expense, you are short on cash to close. The house is The One, and you will lose this opportunity because of a couple thousand dollars. Not having enough money to close may seem like a nightmare, but it's not. We have solutions to help get your deal done.


Seller Concessions


The seller can give some concessions to help alleviate your closing costs and close the loan to circumvent an unplanned emergency, a bad appraisal, or issues during a final walkthrough. For example, let's say you want to purchase a home for $100k. You are $3k short on your total cash to close. The seller can agree to give you the $3k in seller concessions, but in return, it will raise the sales price from $100k to $103k. 


This way, you get your cash to close and the seller makes the difference up in the sales price. This can really work out as a win-win for everyone involved! If you don’t buy the home, the seller won’t get paid, so they are also looking to help the buyers out. We are currently in a sellers’ market, so this tactic is less common currently. However, we have seen concessions happen multiple times this year, so it can happen! 


Limits To Seller Concessions


There are some limits to seller concessions depending on the type of loan you are financing. For conventional loans, the maximum on sellers’ concessions is 3%, 6%, and 9% depending on the down payment on the loan. For FHA loans, the maximum in seller concessions is 6%. However, you can only use the concessions towards your closing costs and prepaids. You must have your 3.5% percent for your down payment at the closing table. For VA loans, technically it's 4% but there are some special exceptions for veterans. 


Next Steps


There are some tips and tricks involving seller concessions that aren't commonly known. This is where working with an experienced mortgage origination team can save you literally thousands of dollars. If you are interested in using seller concessions to help buy a home, contact Chissell Mortgage Group today at (727) 376-6900. You can also visit us at https://www.chissellmg.com/ for more information. 


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