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What is the maximum seller concession or contribution allowed on all conventional loans?

A) 2%
B) 3%
C) 5%
D) 9%

1 Answer

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Final Answer:

Seller concessions or contributions on conventional loans are limited to 5% of the property's appraised value. This means that the correct option is C) 5%.

Step-by-step explanation:

The maximum seller concession or contribution allowed on all conventional loans is 5% of the property's appraised value. This percentage is set by lending guidelines to ensure that buyers have some financial responsibility and to mitigate the risk of inflated property values. For example, if the appraised value of a property is $200,000, the maximum seller concession would be $10,000 (5% of $200,000). Seller concessions can cover various costs, including closing costs, prepaid items, and discount points.

Seller concessions play a crucial role in real estate transactions, as they provide buyers with financial assistance to cover upfront costs, making homeownership more accessible. However, it's essential for both buyers and sellers to be aware of these limits to ensure compliance with lending regulations. Exceeding the allowable concession may result in complications during the loan approval process.

It's worth noting that the specific terms and conditions of seller concessions can vary based on individual loan programs and lenders. Buyers should work closely with their real estate agents and mortgage professionals to understand the implications of seller concessions on their particular loan. This ensures a smoother and more transparent homebuying process.

User Manoj Sreekumar
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