Buyer Credits: How to Save on Closing Costs and Reduce Your Mortgage

When buying a home, every dollar counts. One often-overlooked way to save is through buyer credits, also called credits, lender credits & seller concessions. These are allowances provided to the home buyer to buy down the buyers interest rate, and to help cover closing costs. By using buyer credits, you can lower the cash you need at closing and make homeownership more affordable.

How Buyer Credits Work

Buyer credits can significantly reduce upfront costs. Depending on your home price and location, closing costs can range from a few thousand to tens of thousands of dollars. Credits help offset these expenses, making it easier to buy your dream home.

The availability of buyer credits depends on market conditions:

• Buyer’s Market: More leverage to negotiate credits.
• Seller’s Market: Credits may be harder to secure.

Negotiating Buyer Credits

Work closely with your real estate agent to communicate your financial needs. Determine your expected closing costs and request credits accordingly. Keep in mind:

• Credits may have loan-type limits (conventional, FHA, VA).
• Some credits are specific to certain fees, while others are flexible.
• Negotiated credits can sometimes increase the purchase price, so weigh short-term savings against long-term costs.

Using Buyer Credits Wisely

• Calculate how credits affect your monthly mortgage payment and overall loan.
• Consider trading a slightly higher home price for larger credits to reduce out-of-pocket expenses.
• Combine credits with state or federal first-time homebuyer programs for maximum savings.

Stay Informed

Local market trends matter. Homes that sell slowly may offer more negotiating power for credits, while fast-moving markets may limit your options. Always consult with your mortgage loan officer to ensure buyer credits align with your financial goals.

Bottom Line

Buyer credits are a powerful tool to lower closing costs and make homeownership more affordable. By understanding how they work and negotiating strategically, you can save thousands upfront and reduce your monthly mortgage payment. Complete the attached form to learn more!