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. VA Seller Concessions is a little known feature allowed by VA loans. So check out how it 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. Although most don’t know there is no limit for seller paid costs for buyers on VA loans. 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 escrows
- 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 sellers agree to pay repairs at closing not required by the appraisal, it could be included in seller concessions.
- Pay off of buyer debts. The seller may pay off a Veteran’s installment or revolving debt. In addition the seller can pay judgments or even a 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. As long as it is within the seller concession limit. Discount points are not considered concessions
Why Should I Use a VA Loan?
So buyers, now you know how much the seller can pay on your behalf when using a VA home loan. In addition to 100% financing and no monthly PMI, seller concessions makes VA a great option. You can even use these tools 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 increase interest in your house. More importantly, sell it quicker. So do you want a competitive advantage over other sellers? Consider offering to pay one of the seller concessions mentioned above on top of closing costs. Furthermore, these VA tips could partner with NC Housing Finance Agency’s DPA product! This could help you move on to the next home quicker
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Author: Russell Smith
Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.