There are 2 components of your purchase offer that sometimes get overlooked in negotiations, but each has a significant effect on your mortgage. These 2 items should be considered when making your initial offer and reviewed during any counter offers. Even if you aren't borrowing money to purchase, these items should be taken into account.
The first is seller paid concessions.
When you negotiate the purchase price, you can also factor in seller paid costs as a way to lower the net price you pay. There are limitations on various loans, but generally you can have the seller pay between 3-6 percent of the purchase price towards your closing costs. Escrow items like prepaid taxes, home owners insurance, or mortgage insurance can also be paid by the seller for you at closing. Also, other closing costs like appraisals, fees, discount points can all be paid by the seller on your behalf at closing. This greatly reduces your cash requirements to close as well as lowering your net purchase price.
The second is closing date.
Typically a closing date is scheduled 30-45 days from offer. But, there are a lot of other timeframes that can be negotiated for various reasons. When discussing closing dates, keep in mind the mortgage underwriting process. There needs to be adequate time given for proper appraisals, title work, etc. Usually 30 days is enough, but there can be mitigating circumstances that would delay this process and potential impact your ability to close on time. Always ask your mortgage originator how long he or she will need to close once a contract is accepted.
As always, if you have any questions, please send me a note or give me a call!
