I am wondering what happens to leftover seller/lender credit

Every dollar should be accounted for. Any "leftover" should be credited back to you.

That's up to the lender.. some lenders will do principal reductions, but this is a gray area, so not every lender will do it.. some lenders will make you select a rate that has a lower amount of credit, which could end up requiring more money to be put down.. and some lenders just keep the difference.. but when it comes to lenders credits.. there are laws in place that are not 100% clear, so "every dollar" is not really accounted for.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347