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I'm closing on my first home in a few weeks through a FHA / CDA mortgage. The seller had agreed to provide me with 5k in closing help but turns out my employer will be paying for my 3.5% downpayment along with all the closing costs. I have 2 questions:
1. I desperately need appliances since the house comes with not a single working appliance. Could it be possible for me to ask the seller to sign an addendum where where instead of him agreeing to 5k for closing costs, he agrees to 5k for the purchase of appliances? Could I perhaps obtain an invoice for the appliances I want, let's say at Lowes, and provide that invoice to the title company so they pay Lowes directly at closing with the seller's 5k, so I can have my appliances delivered after closing?
We already have a ratified contract and my lender is sending all paperwork to CDA next week. Would this be a problem with CDA? Do I need to have this done before he sends the paperwork to CDA? Or is CDA completely irrelevant in this regard?
QUESTION 2: In the event the above can not be done or is not allowed, what happens with the 5K the seller originally pledged if they are not used towards closing? Can my bank apply that money towards the mortgage or do I lose that money?
Any ideas or workarounds will be appreciated. Thanks in advance.
Ask the seller to apply the 5K towards appliances (and not closing) on the HUD I. Go get invoices for Appliances and have the title company cut you a check from the seller's side of funds payable to the company providing the appliances. Funds may not be payable to you. You may have to purchase from a smaller appliance store, not a big box store to make this arrangement.
Under no circumstances are you to receive dime one in your pocket......if that occurs, you have a transaction that does not meet guidelines and will not close.
Thanks for your response. Do I need an addendum to the contract for this? Any idea what happens to the funds in case I'm not able to do this? Do I lose the 5k?
You need to call your realtor and have him/her answer this question based on the contract you signed. Or call your real estate attorney if that applies.
As Jk stated contact your Realtor or Attorney for clarification of your contract. Most contracts have language something like " Seller shall contribute up to 5000.00 towards buyers closing cost." In which case they may not owe you anything if there are no closing cost. If they wanted to contribute 5K towards your appliances it would be out of the kindness of their hearts. Your answer is in your contract.
Also, do you know exactly how the company will "pay for" your closing cost? I did a couple of corporate transfers in my life, in both cases I paid all the cost at the actual closing. Then I submitted my closing cost expenses etc. to HR for re-imbursement and a few weeks later I would receive a check. If this is the case it could work for you or against you. It would depend on how closely your HR department looked over the HUD1 statement to see if they noticed the seller credit or if you company even cares. If you don't know already you need to find out immediately how the "company pay for" part is going to be handled.
Last edited by RickTucsonHomes; 06-12-2013 at 04:07 PM..
Thanks for your answer Rick. I contacted my lender and he said that as long as the appliance company brings an invoice to the closing table for the 5k in appliances, they have no problem having the title company issue a check at the closing, payable to the appliance company which will be either mailed to them or given to me the day we close so I can take the check to the appliance company and have them proceed with delivery of my applainces.
From the seller's perspective whether the money is used towards closing costs or pink unicorns it doesn't affect them. (My lender's words, not mine).
As for my employer's side of things, they told me the wire the closing cost money directly to the title company a few days before closing so we're in good shape. I just came back from the appliance store, and picked up top of the line items on the seller's dime, and walked out with a commercial invoice for the whole thing. (My wife was trilled)
I was somehow dissapointed in my realtor's lack of knowledge in this regard, since I originally asked him and he categorically said this couldn't be done, and told me to just suck it up and pay for the appliances. I have the feeling he just didn't want to go out of his comfort zone since he wasn't familiar with this and just by the look on his face you could tell he was only thinking about not jeopardizing his commission. Well, It turns out it CAN be done so if anyone is in the same position as me, now you know.
I would make darn sure that all this is properly documented and signed off by the seller. Most contracts concerning closing cost specifically used the wording 'closing cost', so the seller may show up at closing and refuse to go along with your lenders ideas as appliances are not closing cost.
As Jk stated contact your Realtor or Attorney for clarification of your contract. Most contracts have language something like " Seller shall contribute up to 5000.00 towards buyers closing cost." In which case they may not owe you anything if there are no closing cost. If they wanted to contribute 5K towards your appliances it would be out of the kindness of their hearts. Your answer is in your contract.
This. ^^
I hope you did not spend money you don't actually have yet.
Also, I was told that making ANY large purchases right before closing can jeopardize your financing.
Did you pay for those "top of the line appliances" on credit of any kind?
I hope you did not spend money you don't actually have yet.
Also, I was told that making ANY large purchases right before closing can jeopardize your financing.
Did you pay for those "top of the line appliances" on credit of any kind?
You're absolutely right. I was told the same thing by my lender. That's why today, I didn't pay a cent. We simply picked what we wanted and the store manager provided me with a commercial invoice which will be used by the title company to issue the 5k check payable to the appliance store once we close. Once the store receives the check, they guaranteed the appliances would be on my doorstep 48 hours later.
Don't beat up your Realtor too much......I have veterans that have been in the business for over 20 years and they ask the lender (me) every time, most have been told it cannot be done by someone else. A few lenders do think outside the box and can assist with outside the box thinking that still meets program guidelines. Most Realtors would have said no if you asked if you could somehow get the $5000.
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