How You Can Use Seller’s Assist When Buying Your Next Home

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1. What is seller’s assist? Seller’s assist is a way for the buyer to finance all or some of their closing costs and escrows. The escrow account is the money collected, by the lender, to pay the buyer's taxes and insurance. Closing costs and escrow payments both make up settlement charges. Settlement charges determine the total amount of cash required to close. Thus, seller’s assist allows you to finance a certain percentage of the settlement charges into your new loan.

2. Why is this advantageous? Depending on your location and purchase price, it could be common to experience settlement charges over $10,000. However, in today’s market, it only costs approximately $5 a month for every $1,000 you borrow. Many borrowers would prefer to keep $10,000 in their pocket, if the cost is only $50 a month.

3. Who would this be a good fit for? It’s a great fit for anyone who either doesn't have the cash to close without it, or who would like to keep the money they have for other things while having a minimal impact on monthly payment.

4. Are there restrictions? All loan programs allow seller’s assist. However, there are in fact restrictions for different types of properties and loans. For instance, the maximum seller’s assist for investment properties is 2%. A primary property can get anywhere between 3% to 9%. A government loan can get up to 6%. A conventional loan allows anywhere between 3-9%.

One more thing to add: just because it’s allowed, doesn’t mean you can get it! It depends on the market. There are factors out of your control that affect seller’s assist. That’s why it’s so important to work with a great Realtor and mortgage lender. We work together to try to negotiate this for you if it is something you need.
 

If you have any questions or suggestions for future videos, give us a call or email today!

What to Expect for a Down Payment on a New Home

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A lot of people ask me, "How much money is needed for a down payment?" There are a lot of misconceptions about down payments. Today, we'll go over the down payment options available to buyers who use FHA and conventional loans, since that's how most buyers finance their home purchase.

The minimum down payment for an FHA loan is 3.5% down. If you were to buy a $200,000 home, that means you would need to put $7,000 down.

For conventional loans, the minimum is technically 5% down, but if you meet additional criteria, you'll need as little as 3% down. If you were to buy a $200,000 home, depending on the criteria, you could owe between $6,000 and $10,000 down.

Another thing buyers should keep in mind is closing costs. Both FHA and conventional loans offer a seller's assist, where the seller would offer a credit to the buyer to offset all or some of those closing costs.

Many people say that you need to put 20% down and if you don't, you have to get mortgage insurance, which is a waste of money. Actually, there are many different ways to deal with mortgage insurance. You can build it into the rate and pay a slightly higher interest rate over the life of the loan, pay a lump sum up front, or make a monthly mortgage insurance payment that goes away once you have a certain amount of equity in the property.

The main thing you need to keep in mind is that it does not take as much money as people think to buy a home. If you have any questions, give my team a call or send us an email. We would be happy to help you!