Although a buyer’s market is not currently driving the real estate arena, seller concessions are starting to become more common again. Seller credit can be a game-changer for airline pilot buyers. Whether you are a new hire looking for a financial break until year two or expecting a pay raise with an upcoming move to the left seat, there are seller-credit options that can really go a long way.
Closing Cost Relief: The most common use for seller credit is offsetting those bothersome closing costs, which can range from 2-5% of the purchase price. The seller can chip in to help pay for loan origination fees, title insurance, or even property taxes. Suddenly, that pile of expenses starts to shrink, freeing up cash for moving, furniture, or other necessary home buying expenses.
Temporary Rate Buydown: This option could be great for new hires or someone who found their forever home prior to upgrading. Mortgage rates have recently been coming down, but they’re still on the higher side compared to rates over the last few years. If you negotiate a temporary buydown, the seller contributes cash up front, lowering your rate for a temporary set period (typically between 1-3 years). This allows you to have a lower monthly payment for the beginning of the loan term and potentially refinance into a lower rate later before the full note rate takes effect.
Permanent Rate Buydown: For a more long-term solution, consider a permanent buydown. Like a temporary buydown, the seller contributes to buying down your rate, but this time it's for the life of the loan. Your monthly payments stay lower, adding long-lasting affordability to your dream home. This is the term “buying points,” but it’s the seller who could be buying the points for you.
Negotiations: Seller credit may be offered up front by motivated sellers, but it could also require some negotiation. Be informed about your local market, research typical closing costs, and understand the different buydown options. Armed with knowledge, a resourceful lender and realtor to help, you can confidently propose how you'd like the seller credit applied to your specific needs.
Final Points: There are some limitations to seller credit and what you can use it for. It might not be allowed for all closing costs, so check with your lender. Buydowns may also affect your loan-to-value ratio, potentially requiring a larger down payment or private mortgage insurance. Finally, be careful of potentially negotiating a higher sales price in exchange for significant seller credit up front. The home must appraise no lower than the agreed purchase price, so this is something to watch out for when negotiating.
Seller credit presents helpful choices, especially with the unique airline “promotion” structure we all know so well! They can lower closing costs, unlock lower mortgage rates, require lower monthly payments, and make a home purchase more affordable. Consulting with a mortgage professional can provide personalized insights and guidance tailored to your unique situation. Trident Home Loans (Equal Housing Lender, NMLS 65716) is an airline industry leader for securing the right mortgage for you. Contact Spencer Wartman (NMLS 2109932) at spencer@mythl.com and let him help you secure your future home!
Also, feel free to reach out to Spencer directly if there’s a topic you’d like for him to touch on.
Trident Home Loans, NMLS ID 65716, Corporate Office located at 6723 Plantation Rd, Pensacola, FL 32504.Any offers or advertisements for mortgage products on our website or other platforms are subject to conditional approval. The actual terms and conditions of a mortgage loan, including interest rates, loan amounts, and eligibility, are dependent upon several factors, including the borrower's creditworthiness. Trident Home Loans reserves the right to modify or revoke any offer, and final approval is contingent upon the completion of a full application, verification of information provided, and meeting all underwriting requirements. For information regarding our licensing, you can visit our website at www.Tridenthomeloans.com.Trident Home Loans is an Equal Housing Lender. Please note that this disclaimer is provided for informational purposes and may be subject to updates or changes in accordance with regulatory requirements. Borrowers are encouraged to contact Trident Home Loans directly for the most up-to-date and accurate information regarding mortgage products and offerings. This advertisement is not an offer to lend, and all applications are subject to credit approval. Terms and conditions may apply.
