If you’re thinking about buying a home, you might have heard the term “seller concessions” thrown around. But what exactly are seller concessions, and how can they benefit you? At Edge Mortgage Inc., we believe in empowering our clients with the knowledge they need to make the best decisions on their home-buying path. Not only that, but we remove costly and difficult processes by replacing them with high-quality customer service. We know each client and situation is unique. As a mortgage broker, we have access to many different lenders and products. This means we can more easily find a loan to best fits your needs. If you’re ready to start the home-buying process, or just thinking about it, we can help and we will be with you every step of the way!
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Part of buying a home is learning about all of the mortgage and real estate jargon that gets used. It can be a confusing process, but that’s why we are here. We inform you and always have your best interests at heart. Let’s dive into what seller concessions are, how they work, and what they can cover.
What Are Seller Concessions?
So, what are seller concessions? In a nutshell, seller concessions are a financial contribution from the seller to help cover the buyer’s costs associated with purchasing a home. These can be a great tool for reducing the amount of money you need to bring to the table at closing.
How Seller Concessions Work
Seller concessions are typically negotiated as part of the home purchase agreement. For example, you might ask the seller to cover certain closing costs or other expenses in exchange for offering the asking price. It’s important to include these concessions in the purchase agreement so that everything is clear and agreed upon by both parties.
However, there are limits to how much a seller can contribute. These limits can vary depending on the type of loan you’re using. For instance, FHA loans typically allow seller concessions of up to 6% of the purchase price, while conventional loans might limit it to 3%. It’s always good to check with your mortgage broker—like us at Edge Mortgage Inc.—to understand the specifics based on your loan type.
What Seller Concessions Can Cover
Seller concessions can be used to cover a wide range of expenses, making homeownership more affordable. Here are some common uses:
- Closing Costs: These are the fees you pay at the closing of the real estate transaction. They can include loan origination fees, attorney fees, and more.
- Interest Rate Buy-Downs: You can use seller concessions to lower your mortgage interest rate, which can reduce your monthly payments.
- Prepaid Items: This includes things like homeowner’s insurance and property taxes, which you need to pay upfront at closing.
- Appraisal Fees: The cost of having the home appraised can also be covered by seller concessions.
- Title Insurance: This insurance protects you and the lender from any legal issues related to the property’s ownership.
What Seller Concessions Cannot Cover
It’s important to note that while seller concessions can be used for many things, they cannot be used for your down payment. The down payment must come from your own funds or other acceptable sources like gifts from family members. Seller concessions are specifically for covering other costs associated with buying a home.
Benefits of Seller Concessions for Buyers
Concessions can be a real game-changer, especially if you’re a first-time homebuyer or if you’re tight on cash for closing. Here’s how they can benefit you:
- Lower Out-of-Pocket Costs: By using seller concessions to cover closing costs and other expenses, you’ll need less cash at closing.
- Interest Rate Buy-Downs: Reducing your interest rate with seller concessions can lead to significant savings over the life of your loan.
- Making Homeownership More Accessible: For those with limited cash reserves, seller concessions can make the difference between renting and owning.
Seller Concessions from the Seller’s Perspective
You might be wondering why a seller would agree to offer concessions. In many cases, sellers offer concessions to make their home more attractive in a competitive market or to help close the deal faster. However, it’s worth noting that offering concessions does reduce the seller’s net proceeds from the sale, so it’s often a balancing act.
Edge Mortgage Inc. is your trusted mortgage broker for Colorado, Nebraska, Ohio, and Wyoming
Seller concessions can be a powerful tool in making homeownership more affordable. Whether you’re looking to reduce your closing costs, buy down your interest rate, or cover other expenses, understanding how seller concessions work can give you an edge in your home-buying journey.
At Edge Mortgage Inc., we’re here to help you navigate the complexities of buying a home, including understanding and negotiating seller concessions. If you have any questions or need personalized advice, don’t hesitate to reach out. We’re proud to serve homebuyers in Colorado, Wyoming, Nebraska, and Ohio, and we’re committed to helping you achieve your homeownership dreams.
Read some 5-star reviews from our satisfied clients
“We have used Edge Mortgage, Inc. 3 times. Every time has been fantastic. Keri is honest, dependable and will do anything she can, with her team, to get you the best rates. We have been treated like family every time and will use her services again in the future. Highly Recommend.” -Stephanos
“Company went above and beyond to assist in all areas of the purchase. Communication was fast and responsive. Keri walked us easily through a very difficult process to put us in our new home.” -Todd
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Edge Mortgage Inc. is located in Johnstown, Colorado, and serves all of Ohio, Colorado, Wyoming, and Nebraska. We offer honest answers and a stress-free process and we have no hidden or extra fees, keeping more money in your pocket. We are your trusted mortgage broker and we are ready to serve you. Call us today at 970-744-0000.
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