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    Home Purchase - Home Refinance
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  • Minneapolis, MN: The market has changed very dramatically the past few months as mortgage interest rates took a big jump, slowing down buyers and removing a lot of the crazy multiple offers being made.

    As homes are taking a while longer to sell, some common tips that simply disappeared the past few years are coming back, like seller paid closing costs. Here is are some great tips for selling your home faster by helping the buyer.

    What Are Seller Paid Closing Costs

    Simply put, seller paid closing costs help buyers, and that helps you, while generally not really costing you anything.

    Don't drop your homes selling price, instead offer to pay some or all of the buyers closing costs. A $10K price reduction may save the buyer $30 or $50 per month, but $10K in seller paid closing costs reduces the buyers out-of-pocket expense by $10k. That is a lot, especially for first time home buyers, who are typically strapped financially to come up with both down payment and closing costs in the first place.

    If the buyer is using a no down payment loan, like a VA home loan, or a USDA rural housing loan, with the seller offering to pay some of the closing costs, these buyers can many times buy with little to no out-of-pocket costs!

    Another tool with seller paid costs would be that the buyer could use some of these credits towards buying down their rate could potentially save them $200-$300 per month!

    It Doesn't Cost You Anything

    As a seller, this tool doesn't really cost you anything.  Assume you want $400,000 for your home.  You list it at $412,000 and offer to pay 3% of the buyers closing costs ($12,000).  You wanted $400,000, you got $400,000 in your pocket. You didn't lose anything.

    Assume you want $400,000.  You list it for $400,000.  The buyer offers $412,000, but wants you to pay 3% ($12,000) in closing costs.  You got $400,000 in your pocket and didn't lose anything.

    Assume you want $400,000 for your home. It's sat on the market, and you talk with your Agent about lowering the price to $380,000. Pretty good change you may not need to if you offer to pay up-front some of the buyers closing costs.

    All win win for both you and the buyer.

    Listing your home with an offer of seller paid closing costs RIGHT IN THE LISTING may help it move faster as buyers factor this information into their decision before even making an offer, knowing the numbers on your home are more attractive than the similar home down the street. I of course am not saying your home won’t sell otherwise, I'm just saying that this tip might help it sell quicker and keep you from doing a price reduction two or three times.

    Seller Paid Closing Cost Limits

    The amount of seller paid closing costs mortgage lenders allow sellers to pay on behalf of the buyer varies by the type of loan the buyer is using.  The most common loan, the standard conventional loan, allows for the seller to paid up to 3% of the purchase price with under 10% down, but up to 6% of the purchase price with more than 10% down.

    • FHA allows up to 6%
    • VA allows says 'all' reasonable costs, but going over 4% is usually moving into the problematic area
    • Conventional investment properties is only 2%

    Get Pre-Approved

    Just like you want to know any buyer of your home has qualified for financing, you need to do the same too.  The earlier in the process the better. The fully licensed home loan experts at Cambria Mortgage, the Joe Metzler Team are here to help.  We lend in MN, WI, IA, ND, SD, CO, FL. Call (651) 552-3681 to get started, or just click any of the APPLY buttons on this web site.

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