This rule is important to understand. The credits cannot exceed the total amount of allowable closing costs. For example, if the seller offers a 6% credit towards closing costs on a $300,000 transaction, that's a credit offer of $18,000. However, if they buyer's allowable closing costs add up to $14,500, the credit is capped at $14,500. In fact, the total of all credits would be capped at $14,500.
What are allowable closing costs in PA?
Allowable closing costs may include lender fees, title insurance fees, recording fees, transfer tax, escrows, tax pro-rations/reimbursements back to seller, interest rate buy down, along with first year’s homeowner’s insurance premium, home inspection, radon test and termite inspection. Check with your mortgage lender for a list of allowable closing costs that apply to your transaction.