Rhonda Porter who writes a mortgage blog, The Mortgage Porter, recently wrote an excellent article about how sales concessions may result in an increased down payment amount.
A sales concession is something that is not part of the real estate, such as cash, furniture, automobiles, decorator allowances, moving costs, or other “giveaways”. The value of the sales concession must be deducted from the sales price when calculating loan to values.
For example, if you have a sales price of $200,000 and patio furniture valued at $3,000; the sales price the lender will use is $197,000 (200,000 – 3000). Let’s assume you’re putting 10% down payment. Without the sales concession, 10% down would be $20,000. With the sales concession, 10% down is going to be a bit more:
How much more? Continue reading this article at The Mortgage Porter.
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