Lender Paid Closing Costs Save Negotiations

Perhaps the most misunderstood portion of a #RealEstate transaction are the #ClosingCosts.

For the purpose of this blog, closing costs are everything that the buyer has to pay for except the down payment.  Title Fees, Origination Charges, pre-paids, everything rolled into one number.

On a recent transaction, I was representing the Seller.  The Buyer's initial offer was quite low, and also included a Seller Concession for Closing Costs.  After talking with the Buyer's agent at length, I discovered that the primary concern of the Buyer was that he be able to keep the cash that he would normally lay out for closing costs.  The Seller was adamant that he would not pay closing costs.

I called the Lender involved in the transaction to see if he could talk to the Buyer about putting closing costs into the loan.  The interesting part of this is that the Lender initially said that they wouldn't do it.  After a couple of minutes of chatting about loans, I discovered that the lender could cover a good sized chunk of the closing costs, but they would require an additional 1/8th point of interest.  As a matter of fact, for an additional 1/4 point, they could cover them all!

So now the question was how much would this add to the loan, and how much could the Buyer put up with?

It turned out that 1/8th point added $11 to the monthly payment.  1/4 point added $23 to the monthly payment.

When the Seller learned that the Buyer was going to pay at least some of the closing costs, he decided that splitting the costs with the Buyer would be OK.

We closed the transaction.

#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman