Closing costs - Where does the leftover money go? (feedback, clause, mortgage)

[elisdad]

If the seller agrees to pay $3000 in buyer closing costs and the actual buyer closing costs are $2500. What happens to the additional $500?

Thanks for the information.

elisdad

[allforcats]

The seller pays closing costs NOT TO EXCEED $3,000. If the costs are lower than $3,000, the seller pays the actual cost. There is no "excess" that goes to anyone else.
If the closing costs had been HIGHER than $3,000 the amount over that would have been paid by the buyer.

[Mike1306]

If it is less it will generally be added to the sellers proceeds.

[elisdad]

Thank for the responses. I was afraid this was the case. My realtor put this in on our offer for a home, where as I preferred offering a lower sale price. As part of my corporate relocation, a significant portion of my CC will be paid by my company. It seems I would have been better off in subtracting 3K off the offer and asking for 0 in CC.

elisdad

[Rakin]

On a relocation where they pay expenses it makes no sense to ask for closing costs. Must be a rookie mistake that could cost you money.

can you amend the contract moving this to a reduction of the sales price?

[TexasHorseLady]

Agreed that on a relocation where closing costs are paid already, it doesn't make sense to ask for them to be paid. However, the wording on our contract (written by TREC) regarding this is:

Seller shall also pay an amount not to exceed $_________, to be applied in the following order: Buyer's expenses which Buyer is prohibited from paying by FHA, VA, Texas Veterans Housing Asistance Program or other governmental loan programs, and then to other Buyer's expenses as allowed by the lender.

So, any overage above and beyond closing costs could be put to other expenses of the Buyer, up to that limit.

That is, of course, just in Texas. Not knowing what state you're in, and not being fully cognizant of all the ins and outs of the contracts in all the states, I don't know how yours is worded or where anything over and above closing costs would be allocated.

[elisdad]

Thank you for the responses. The contract has a similar clause about VA, etc... I appreciate all of the feedback.

[Korillian]

We had a similar situation. Our CC were covered by relocation -- certain things only. So I asked that the money which the seller was giving us be put toward the things that the relocation package wouldn't cover. The seller's money went toward our prepaids and so on. We had 5K in closing costs paid for by the seller and we used every penny.

[adlnc07]

You might also be able to use the money to get a lower interest rate on your mortgage (i.e. pay points upfront). That's better than letting it go to waste.

(note: I've not actually tried to do this, but I thought I'd mention it - no idea if it's "legal" or whatever!)

[Brandon Hoffman]

Originally Posted by adlnc07

You might also be able to use the money to get a lower interest rate on your mortgage (i.e. pay points upfront). That's better than letting it go to waste.

(note: I've not actually tried to do this, but I thought I'd mention it - no idea if it's "legal" or whatever!)

This isn't a bad suggestion. Make sure points are included and not precluded and that it would be worthwhile.