Imagine buying a home with no money down and having stuff paid for by someone else for you? Or what about a seller being able to offer to pay for things other than closing costs to sell quicker? Sound too good to be true? It can be done with VA loans, so let’s learn how. Seller Concessions is a little known feature that VA loans allow and can help buyers and sellers do some really creative things. In addition to these features, VA can help a Veteran, service member, or surviving spouse be able to buy a home with potentially no money down. Most are aware of seller paid closing costs. There is no limit for how much in actual closing costs that the seller may pay on behalf of the buyer on a VA loan. Closing costs include items such as the title search, recording, title insurance, appraisal, lender discount points, credit report, etc. Seller Concessions are different so let’s discuss those and how this can help a buyer and even a seller tremendously.
Seller Concessions Allow the Buyer Additional Advantages:
As mentioned, this is not all about the buyer. Keep in mind that these tools and incentives are helping a seller to get their house sold quicker as well. The maximum amount of seller concessions allowed on a VA loan is 4% of the lower of the sales price or appraised value.
Seller Concessions Allowed on VA Loans:
- Insurance and Property Taxes – The seller can pay the first year of insurances, plus the set up of the escrow for taxes and all insurances
- VA funding fee – Normally the funding fee is added on top of the base loan amount, but the seller is allowed to pay a portion or all of the buyer’s funding fee. This helps lower the buyer’s loan amount
- Repairs not required by the appraisal – If there are some agreed upon repairs included at closing which are paid by the seller, these repair amounts may be included in the seller concessions
- Pay off of buyer debts – The seller may pay off a Veteran’s installment or revolving debt, judgments, or even remaining lease on current residence. Check out an example
- Temporary rate buy downs – If the buyer is paying a fee for a rate buy down, then the seller may pay towards this fee within the seller concession limit. Discount points are not considered concessions
So buyers, now you know how much the seller can pay on your behalf when using a VA home loan. With these benefits and being able to buy a home with little to no money down along with no monthly PMI, you need to check your qualification with Team Move now. You can even do these things on a VA Jumbo Loan! Find a conventional jumbo loan that will do these types of things with a small down payment. It doesn’t exist.
Sellers and home builders reminder! You can use these tools to be able to increase the interest in your house and most importantly, sell it quicker. If you want to have a competitive advantage over other sellers, consider offering to pay towards one of the seller concessions mentioned above on top of closing costs. This could help you move on to the next home quicker
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