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Old 08-08-2012, 02:17 PM
 
38 posts, read 109,293 times
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I received $4,000 in paid closing costs by the seller and when I got to closing it changed to $2,700. I asked my LO why that happened and his response was as follows:

"The guidelines require that you contribute at least 3.5% of the transaction. Your Earnest check+funds at close equaled that amount. If you had received full credit, you would have been short to meet that requirement."

Is this true?
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Old 08-08-2012, 02:24 PM
 
Location: Phoenix AZ
5,900 posts, read 10,304,244 times
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Quote:
Originally Posted by househunting523 View Post
I received $4,000 in paid closing costs by the seller and when I got to closing it changed to $2,700. I asked my LO why that happened and his response was as follows:

"The guidelines require that you contribute at least 3.5% of the transaction. Your Earnest check+funds at close equaled that amount. If you had received full credit, you would have been short to meet that requirement."

Is this true?
Could be true, but there's no reason *not* to take the seller's contribution and use your funds to reduce the loan amount. if you asked for $4k in closing costs, and the actual cost was only $2k, the seller wins. I suspect your agent wrote the offer in a way that didn't really help you. Certainly, these kinds of things need to be addressed before you close.
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Old 08-08-2012, 02:59 PM
 
Location: Austin
7,051 posts, read 16,724,490 times
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Your LO and agent should have been on the same page when writing the offer. What you described is an FHA guideline where you have to have 3.5% into the transaction, either your own money or gifted funds. The seller cannot gift funds. He should have been aware of the difference and bought down your rate. You should have been aware of the amount you needed as you had to sign off on a Good Faith Estimate very early in the process.
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Old 08-08-2012, 03:46 PM
 
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If I understand correcty, you're not out more money, just upset the seller didnt have to contribute as much as stated. I'm not in real estate but recently sold my parents home, we also didnt have to pay as much as we were told. I wish I could remember the exact reason, I want to say points or something. I doubt a seller has anything to do with points, so probably wrong on that. lol We were thrilled as we already had soooooo many costs for the buyer. So if your case was like ours, and it didnt take a dime from you, I'd ask that you maybe be happy the seller saved a few bucks. If you've never sold a house you have no idea how expensive it is. But IF this hurt you finacially, I'd be talking to my realtor. Enjoy your new home!
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Old 08-08-2012, 04:24 PM
 
38 posts, read 109,293 times
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Quote:
Originally Posted by FalconheadWest View Post
Your LO and agent should have been on the same page when writing the offer. What you described is an FHA guideline where you have to have 3.5% into the transaction, either your own money or gifted funds. The seller cannot gift funds. He should have been aware of the difference and bought down your rate. You should have been aware of the amount you needed as you had to sign off on a Good Faith Estimate very early in the process.
The GFE stated I needed $4,300 to close. At closing I only needed $2,700. So I guess it was a last minute thing because we didn't know the final costs until 2 hours before closing.
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Old 08-08-2012, 05:50 PM
 
2,677 posts, read 4,178,489 times
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Quote:
Originally Posted by househunting523 View Post
The GFE stated I needed $4,300 to close. At closing I only needed $2,700. So I guess it was a last minute thing because we didn't know the final costs until 2 hours before closing.
You could also ask the to lower the selling price by the difference too. Bottom line of the seller remains the same whether you use it to buy point or closing assistance.
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Old 08-08-2012, 08:07 PM
 
Location: Chesterfield, VA
1,218 posts, read 4,413,811 times
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Just had this happen on one of my transactions. Because the HUD had to have a 72-hour review period. this put us earlier in the month versus the end of the month and the increased number of days meant a larger amount of interest, thus the buyer was able to use the full amount of the closing cost credit. Also, to make certain that doesn't happen to my buyers, lately I am writing that the closing cost credit can be used for "closing costs, prepaids, discount points, and/or unpaid debt." Occasionally I'll even ask them for the VA funding fee!

Last edited by onevthoki; 08-08-2012 at 08:09 PM.. Reason: Added a thought
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Old 08-08-2012, 08:23 PM
 
Location: MID ATLANTIC
7,555 posts, read 17,435,712 times
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If he would have asked for a sales price reduction, then his lender credit would have also gone down, requiring redisclosure and a 72 hour cooling off period and the closing delayed 3 days.

The buyer MUST have their minimum down payment in to the transaction, no exceptions. Just the prepaid interest alone can vary by a thousand dollars - when it comes to the taxes, well, several thousand, depending upon value.

Judging by the timing, I suspect the loan officer and the agent discussed the offer. We have also seen constant market improvement over the past 60 days with the exception of last week. When someone is making an offer, they aren't aware (at least very few are aware) the market is constantly changing. I believe the loan officer gave the agent and OP the costs, yet when the OP locked in, the market had improved (creating an additional credit) and the contract had already been negotiated, and the loan locked better than expected. This exact scenario has happened on several of my closings in the past 2 weeks. Take a 1/2 point improvement in price and take away all the prepaid interest and maybe cut the taxes by a month, and heck yeah, it's better. Typically, with an agreeable seller, every effort is made to spend that money. Purchase a home warranty or pay ahead the HOA/condo fees by up to a year (these are not closing costs, so the seller must be agreeable).

As someone else suggested, the OP isn't unhappy with the deal they got, the OP is upset they didn't use all the seller credit. Surely the OP was prepared for the balance of the down payment? But I'm also thinking when the costs go above the minimum down, someone would have been pitching a fit. The negotiating agents, the loan officer and title company are all juggling hundreds of thousands of dollars. Personally, I'd be happy they over estimated and no additional money was needed from me at closing. There was a windfall, it just wasn't the buyer's and it wasn't the bank's - it happens.
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Old 08-09-2012, 07:36 AM
 
4,509 posts, read 11,462,162 times
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You should have used the "extra" seller funds to buy down your rate. The seller ended up netting an extra $1,300 on the deal. Put another way, the buyer got screwed out of $1,300. The loan officer should have had a better handle on the #'s before closing.
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Old 08-10-2012, 04:41 AM
 
Location: MID ATLANTIC
7,555 posts, read 17,435,712 times
Reputation: 8020
Quote:
Originally Posted by TimtheGuy View Post
You should have used the "extra" seller funds to buy down your rate. The seller ended up netting an extra $1,300 on the deal. Put another way, the buyer got screwed out of $1,300. The loan officer should have had a better handle on the #'s before closing.
Taking the extra $1300 to buy down the rate would have triggered a decrease in the lender credit, requiring redisclosure for the items in the GFE that could not change without creating a "change of circumstance." A 72 hour wait would have delayed the closing
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