Seller's Concessions and Paid Rate Buydown
A Buyer recently informed me his Seller just offered him a 2-point concession…What does this mean and what are the buyer’s options? A seller’s concession is a monetary contribution given by a home seller to a potential home buyer to use towards her closing expenses and prepaid items. Lenders allow the seller of a home to “credit” a portion of her proceeds to the home buyer but lenders have limits on the amount of seller’s concession they will permit. Generally, for “conventional” (non-jumbo and sold on the secondary market to Fannie Mae and Freddie Mac, among other investors) loans, if the buyer’s down payment is less than 10%, the seller can contribute up to 3%. If the down payment is 10 – 25%, the Seller can contribute up to 6%. If the down payment is more than 25%, the Seller can contribute up to 9%. Many mortgage professionals will apply the seller funds to underwriting costs, escrow fees, and loan fees, but some deeper thinkers consider permanently buying down the interest ra