What is the Benefit for a seller of home to want the closing rolled into the mortage?

Question

We are buying a house the seller wants the closing cost rolled in to our mortage, I understand how this could help the buyer if they do not have the money to put up front. But how would this help the seller?

Answer 1

There is Buyer's closing costs, and Seller's closing costs. The Usual way is here: Home is 135,000 buyer offers 134,000, seller accepts. Seller has a 50,000 mortgage that gets paid off, all of his closing costs come out of the difference, he gets whats left. You're closing costs are either out of pocket, or wrapped into a 150,000 mortgage if you found 100% financing. The way I could see him wanting closing costs in the mortgage: 1. He needs you to pay all the closing costs, and wants them in your mortgage, 2. He owes more than he's selling it for, again he wants them in your mortgage 3. He needs work done on the house and doesn't want them out of pocket, but from the proceeds. In this case the funds need to come out of CLOSING, before he receives his proceeds, but it wouldn't be on your mortgage. Talk to a local real estate professional, or even a title/escrow company. They will make sure everything is straight.

Answer 2

I think you might want to re-word your question. It is confusing because there is no reason a Seller would have any say about how you paid the closing costs. I can speculate on only two instances.

1. The Seller has an interest in helping you obtain a mortgage. In which case there must be an affiliated business disclosure (ABA) somewhere to sort it out.

2. The Seller is trying to avoid paying any of your closing costs. In Georgia, as a local thing, the Seller usually pays some portion of the Buyer's closing costs. So if you roll it into the loan, then they avoid having to pay the closing costs for you.

Hope this helps answer the question. Best of luck.

Answer 3

If you're buying a house for $150,000 and the seller raises the price to $160,000 to cover the fact that he's paying your closing costs it shows the purchase price of the house as being more. Is he trying to raise property values for the whole neighborhood?

You'll be paying more each month if you roll your closing costs into the loan so I have no idea why a seller would request this.

Answer 4

nothing really. it just assures him that the deal will push through, knowing that the closing costs are rolled into the loan, the seller does not have to worry at closing that the buyer will come with no check or money at all

Answer 5

since you have the closing costs, i don't understand how you would even let him dictate to you how you should pay them and your mortgage! the nerve!

why don't you tell your agent to tell the seller that she will be happy to provide you a letter from your lender showing that you have the closing costs set aside already.

if you do that, your mortgage amount and interest you pay will be higher...that is why i am very irritated by that seller's stupid demands.

Answer 6

That doesn't make sense at all. It doesn't benefit you. It sounds like you are going to be paying more in a mortgage payment. And it's up to the mortgage company to allow closing cost or a percentage of closing cost in the mortgage. I don't like, sounds like they would be getting more than you offered.