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My nephew just bought a house, and I was told he had to come up with 17k for the second closing ?. This is his first home purchase, I don't understand the "Second closing" ?
The first closing may not have transferred title. One scenario is that the appraisal came up short. They went ahead with all the other paperwork but the mortgagee is requiring shortfall payment before they will fund and pay the seller.
The first closing may not have transferred title. One scenario is that the appraisal came up short. They went ahead with all the other paperwork but the mortgagee is requiring shortfall payment before they will fund and pay the seller.
Impossible to tell without information.
What did your nephew say?
I don't want to seem like I'm prying into his finances. I have purchased 5 homes, never had, or heard of a second closing.
A second closing is a feature of some new-construction loans. Basically, there is a first closing to open a line of credit to fund the construction, and a second closing once the construction is complete to convert the loan into a standard mortgage. If the completed house didn't appraise for as much as expected, that could lead to a requirement to bring cash to the second closing.
A second closing is a feature of some new-construction loans. Basically, there is a first closing to open a line of credit to fund the construction, and a second closing once the construction is complete to convert the loan into a standard mortgage. If the completed house didn't appraise for as much as expected, that could lead to a requirement to bring cash to the second closing.
Exactly. Is this new construction or a rehab loan? These are known in the business as C-perm or Construction Permanent loans. That additional 17K would be for the escrows and anything not paid for in the construction loan.
Exactly. Is this new construction or a rehab loan? These are known in the business as C-perm or Construction Permanent loans. That additional 17K would be for the escrows and anything not paid for in the construction loan.
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