Seller Point (or the seller's contribution) is a single payment (or finance charge) made by the seller to the buyer's lender to reduce the cost of the loan to the buyer.
One point equals 1% of the loan amount. Payments may be requested by the creditor or voluntarily by the seller. Usually, this situation occurs when the seller is in a hurry to sell the property or has a problem in finding the buyer. This fee is a non-recurring closing fee which is also a tax break for buyers .
Video Seller's points
Benefits and Use
Benefits
Buyers can use seller points to pay pre-paid, mortgage, or interim purchase rates. This means that if you have money in savings you have to keep, you can ask the seller to pay a 1 to 2 percent interest reduction for one year or pay upfront interest, the cost of the homeowner association, or homeowner insurance for a certain period of time. That will give you time to refill your savings account for the money you use when closing and maintain your 3.5 percent equity investment on the property.
Usage
If the buyer plans to use savings to pay for closing costs, discount points, or purchase rates, cash may be charged for the down payment. This can be used to keep payments below a certain dollar amount. The lender can suggest paying discount points to lower the buyer's interest rate and make buyer payments more affordable. If the buyer is unable to pay points and advances at closing, his agent asks the seller to pay for all or part of the discounted points and recoup the cost in his bid rather than ask for a reduced price. The seller gets the same net as the offer and the buyer gets the points he wants while still saving the cash needed to pay the entire down payment.
Maps Seller's points
References
External links
- Using Seller Points
Source of the article : Wikipedia
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