Sellers Concession - When purchasing a proerty the seller may offer the buyer a concession. Especially useful in high LTV financing (when you are borrowing more than 80% of the value of the home), the seller may ask for slightly more money than you have agreed upon for the house and rebate the balance to the buyer to help cover closing costs and otherwise facilitate the transaction.It is important to note that the appraised value of the property must be greater than or equal to the seller's concessional price.
Example: You purchase a home for $300,000 and you have $5,000 in closing costs. Offer $305,000 with the seller to pay $5,000 in closing costs so that you do not have to pay them out of your pocket. Most lenders do not allow prepaids to be paid by the seller so make sure to have enough funds for this. Prepaids are your interest per day and the money that is used to set up your escow account.
There are different types of 100% loans. You can
either get 1 loan for 100% or an "80/20" loan. Speak to your mortgage
professional to see which program is best for you!
