A seller contribution is another incentive when purchasing a home. This takes places when the seller of the property promises money towards the buyer’s closing costs.
During the time of the purchase the buyer should not have to wait until the seller brings this option to the table. Be ready to ask and negotiate unless you prefer for the seller to lower the home sale price instead. The buyer must then calculate which is the most benefiting, the seller contribution vs. lower home sale price.
An inexperienced buyer can feel intimidated to initiate the subject, the best way is to ask the banker or mortgage broker to discuss this option. Some home buyers lack the sufficient funds for the home purchase. A seller contribution can make the major difference.
A seller will choose seller contribution for several reasons:
1. He or she brought another house and cannot carry the cost of two monthly mortgages.
2. Their employer is relocating him/her.
3. The seller needs the equity for an investment.
4. The seller’s home has exceeded the length of time on the market.
Benefits of seller contribution:
1.Buyer can place a larger down payment for a lower interest rate.
2.Eliminate the charge of Private Mortgage Insurance(PMI) if applied.
3.Buyer can focus on lowering their current debt and achieve a lower interest rate.
The seller must make sure that the exact amount agreed to contribute is in writing. To make sure there are no troublesome tax consequences check with the lender to be certain because of real estate laws varying state to state.
Wilda Escarfuller is a licensed Real Estate Agent in the state of New York. Her expertise has helped many home buyers to make the right decisions. She understands that while purchasing property is exciting it can place a series of consequences if one does not know the basics. Find more of Wilda Escarfuller’s useful info on: http://www.realestatewizard.blogger.com
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