What Can I Use My Seller Credit For?
Seller credit can come in handy when purchasing a new house. Watch the video to discover a few of the different ways you can use seller credit to your advantage.
If you’ve negotiated a seller credit for the purchase of your home, that credit could be used for three things.
One is pre-paid, which is considered to be the interest from the date of closing until the end of the month and it deposits into your property tax and homeowners insurance account.
Now, what we have to be careful of is when we’re looking at the property taxes that can be paid by the seller – it’s the difference between what you’re depositing into your tax escrow account and the credit you’re going to receive at closing from the seller for the property taxes during the time in that year that they own the property.
So as a general rule of thumb, it’s about two to three months worth of your property tax escrow account.
One other thing that they can pay for is your first year of homeowners insurance premium. Typically, you pay the homeowner’s insurance premium when you buy a home before closing, but if instead, you have that premium paid at the closing table then the seller can pay for it.
And lastly, it’s the costs associated with your loan that the seller can pay for.
So really the seller can pay for everything except your down payment.
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