Why You Should Negotiate a Closing Cost Credit



When I’m working with one of my clients, one of the first pieces of advice I give—especially to first-time home buyers who have limited income and limited reserves in the bank—is to always negotiate a closing cost credit. A closing cost credit results in the seller paying your closing costs. They’re not giving you money at closing; instead, what they’re doing is building in the cost of your closing into the purchase of your home.


For example, let’s say you’re purchasing a home that costs $100,000. Borrows may step in and want to lowball the seller by offering $85,000 thinking that they’re going to get you a great deal. The problem is that closing costs in the state of Illinois total about $5,000. It doesn’t matter what the price of the home is—closing costs will always total $5,000. 

"It’s always a good idea to negotiate a closing cost credit"


Why are closing costs uniform across the board? This is because they represent an accumulation of several different service fees calculated independently from the home’s price, such as the appraisal, the home inspection, the cost of homeowners insurance, etc. Your closing costs, then, can sometimes exceed your down payment. That’s why negotiating a closing cost credit is a good idea.


If you have any questions about closing costs, don’t hesitate to call me today or send me an email. I’m here to answer all of them.