What is the difference between a lender credit and a seller concession as closing-cost assistance?

What is the difference between a lender credit and a seller concession as closing-cost assistance?

• A. Lender credits reduce closing costs funded by the lender; seller concessions are negotiated credits offered by the seller to cover closing costs.
• B. Lender credits increase closing costs funded by the lender; seller concessions are negotiated credits offered by the seller to cover closing costs.
• C. They are interchangeable and have no effect on closing costs.
• D. They refer to only pre-closing adjustments.

Answer: (A)

Closing-cost assistance comes from who pays it and how it affects your loan. A lender credit is money the lender provides toward your closing costs, usually in exchange for accepting a higher interest rate or by waiving certain lender fees. This credit lowers the cash you need to bring to closing or reduces prepaid costs, though you’ll often pay more over the life of the loan due to the higher rate or rolled-in costs. A seller concession is a negotiated amount the seller agrees to credit you at closing to cover part of your closing costs. It reduces your out-of-pocket cash at closing without changing the loan terms in the same direct way as a lender credit, though limits on how much a seller can contribute vary by loan type and program. In short, lender credits come from the lender and can affect loan terms, while seller concessions come from the seller and reduce your cash due at closing. Both lower the amount you need to pay at closing.

Closing-cost assistance comes from who pays it and how it affects your loan. A lender credit is money the lender provides toward your closing costs, usually in exchange for accepting a higher interest rate or by waiving certain lender fees. This credit lowers the cash you need to bring to closing or reduces prepaid costs, though you’ll often pay more over the life of the loan due to the higher rate or rolled-in costs.

A seller concession is a negotiated amount the seller agrees to credit you at closing to cover part of your closing costs. It reduces your out-of-pocket cash at closing without changing the loan terms in the same direct way as a lender credit, though limits on how much a seller can contribute vary by loan type and program.

In short, lender credits come from the lender and can affect loan terms, while seller concessions come from the seller and reduce your cash due at closing. Both lower the amount you need to pay at closing.