Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Your seller actually PAID all of your closing costs for you? If so, that's a first I've heard on Long Island. What town did you buy in?
Or do you mean he let them fiddle around with the paperwork somehow to make it look like the house was sold for more while really accepting less money from you?
Hmm, if by "fiddle around with the paperwork somehow" you mean a seller's concession, then yes. No, the seller did not pay for our closing costs, he simply agreed to go along with a seller's concession which allowed us to roll our closing costs into the loan. For this to take place, the house needs to appraise for that higher amount, which ours did. This was an FHA loan, so I can't speak for conventional loans.
I'm not an expert by any means, but I did just go through 99% of the home-purchasing process on LI, and a concession is simply a way to roll those costs into your mortgage - the seller will not actually pay your closing costs (at least not here).
I thought banks weren't doing seller's concessions anymore? That's what I was told in 2009. I did a seller's concession when I was purchasing my condo in 2005 before the housing bubble burst. I remember $7k was rolled into the mortgage towards closing costs but the rest had to come out of pocket. It all depends upon the amount the house appraises for. So if you need to do a seller's concession, you better hope that the house you are putting an offer on appraises for a certain percentage above the price you are paying. I just remember hearing in 2009 don't even think of doing a seller's concession b/c it wasn't happening often in that market due to the conditions and home prices falling. maybe things have improved since then now so they are doing them again? My cousin who is a mortgage broker is the one who told me that the concessions aren't common anymore or rather allowed anymore as well as Bethpage Credit Union where I got my loan from.
When doing a seller's concession what happens is they price the amount you are paying higher this way the mortgage can be approved for more and then at closing after you pay to the seller, they write a check back to you or the bank to pay the closing costs that you are borrowing against your mortgage.
Thank you for explaining! Now I see what he meant. I never did that with the (ouch!) closing costs ...
And if you get caught (it takes one disgruntled tenant or one neighbor who doesn't like your tenant parking in front of his house for instance to make a phone call) you will be in for a world of fines, inspections, and official demands for you to dismantle your "income suite" and cease and desist from illegally renting it again or else. So save money from the rent you make for lawyers' fees. I suggest calling some beforehand and asking their hourly rates to get prepared and calling whatever Town you end up in and asking what the fines are to get prepared.
Oh I know. Didn't say it was a requirement when looking for a house, just said we'd considered it since we saw a house or two with income suites already put in them. Not sure I'd like the idea of being a landlord right when we move in either.
I would never have a basement apartment for an income suite. I've lived in them and they are not fun and not healthy.
Thank you for explaining! Now I see what he meant. I never did that with the (ouch!) closing costs ...
You're very welcome. I remember when my boss (who is my attorney) was doing my closing and trying to explain it all to me..I so didn't understand it but after going through with the process, I understood it more. It can def be confusing! But it really depends on what the house appraises for. For someone in today's market to go to contract with someone who wants a seller's concession, they have to be pretty positive or hopeful that their house will appraise for more than what they are selling it at. I know I wouldn't accept a seller's concession today as a seller. I'd be worried that we would tie the house up into contract and then be taken off the market for a couple of weeks only to find out the appraisal wasn't high enough and then have to search to find a buyer again. However, if my home was on the market for a year or so..then I would probably consider it b/c I'd be desperate!
Hmm, if by "fiddle around with the paperwork somehow" you mean a seller's concession, then yes. No, the seller did not pay for our closing costs, he simply agreed to go along with a seller's concession which allowed us to roll our closing costs into the loan. For this to take place, the house needs to appraise for that higher amount, which ours did. This was an FHA loan, so I can't speak for conventional loans.
I'm not an expert by any means, but I did just go through 99% of the home-purchasing process on LI, and a concession is simply a way to roll those costs into your mortgage - the seller will not actually pay your closing costs (at least not here).
Okay thanks for explaining that!
So at the end, what percentage of price did you put down on the home? Adding in closing costs to the mortgage made that lower. How low a percentage can you go with FHA? I heard they were making it higher or something.
And if it was less than 20%, how much per month do you have to pay extra because of it? I know regular loans have mortgage insurance for less than 20% down. Does FHA have the equivalent of mortgage insurance?
And if that apt was illegal, on top of that trouble, your aunt could get fined $5000 in Queens. I know someone renting an illegal basement it happened to.
Yes it was legal. She has a 2 family home. I believe that my aunt called the cops on her and they told her that they couldn't do anything about it and that she just had to go through this whole long eviction "process", which was dragged on even further because of the child living there.
You're very welcome. I remember when my boss (who is my attorney) was doing my closing and trying to explain it all to me..I so didn't understand it but after going through with the process, I understood it more. It can def be confusing! But it really depends on what the house appraises for. For someone in today's market to go to contract with someone who wants a seller's concession, they have to be pretty positive or hopeful that their house will appraise for more than what they are selling it at. I know I wouldn't accept a seller's concession today as a seller. I'd be worried that we would tie the house up into contract and then be taken off the market for a couple of weeks only to find out the appraisal wasn't high enough and then have to search to find a buyer again. However, if my home was on the market for a year or so..then I would probably consider it b/c I'd be desperate!
I could also see a seller not wanting to do this because if the house appraises for more than what he is selling it for he may say to himself, "I can get more for this house! Why am I selling it for less?" (I can see this especially on LI where some people are still trying to get a fortune for unimproved, unmaintained old as the hills homes as if it were still the housing bubble!)
I thought banks weren't doing seller's concessions anymore? That's what I was told in 2009. I did a seller's concession when I was purchasing my condo in 2005 before the housing bubble burst. I remember $7k was rolled into the mortgage towards closing costs but the rest had to come out of pocket. It all depends upon the amount the house appraises for. So if you need to do a seller's concession, you better hope that the house you are putting an offer on appraises for a certain percentage above the price you are paying. I just remember hearing in 2009 don't even think of doing a seller's concession b/c it wasn't happening often in that market due to the conditions and home prices falling. maybe things have improved since then now so they are doing them again? My cousin who is a mortgage broker is the one who told me that the concessions aren't common anymore or rather allowed anymore as well as Bethpage Credit Union where I got my loan from.
When doing a seller's concession what happens is they price the amount you are paying for the house higher this way the mortgage can be approved for more (pending an appraisal comes in at the right amount) and then at closing the bank writes a check to the seller for payment of that full price and then the seller writes a check to your or back to the bank on your behalf to pay the escrow and closing fees, etc. which in turn is really the amount you are still borrowing from the bank for your mortgage. It's a little confusing but it makes sense in a market where the home will appraise for more than what the buyer is paying.
Your description of the process is exactly right, and how it worked for us.
I can tell you first-hand, they are doing seller's concessions, at least for FHA loans. However, needing one will hurt your purchasing ability as it turns off a lot of sellers. Sellers are after a quick and easy sale, which is why an all-cash offer is so attractive. So, the prospect of going through the process only to have it fall apart once the house doesn't appraise for that increased number (to cover the price of the home and the closing costs) will make your terms unfavorable in the eyes of most sellers.
Yes it was legal. She has a 2 family home. I believe that my aunt called the cops on her and they told her that they couldn't do anything about it and that she just had to go through this whole long eviction "process", which was dragged on even further because of the child living there.
That's true. It's all a legal process and after the court appearances are through, you have to wait for the sheriff to do the evicting on their timetable. I have heard that in Nassau County the landlord even has to store the evicted tenant's belongings in a storage facility at the landlord's expense instead of simply throwing them to the curb.
And if it was less than 20%, how much per month do you have to pay extra because of it? I know regular loans have mortgage insurance for less than 20% down. Does FHA have the equivalent of mortgage insurance?
I can answer this part for you b/c on my current loan, I pay PMI b/c we didn't put down 20%. We pay $147 per month for PMI and our loan to value ration when we purchased the home (conventional loan) was 95% so we put down 5% and financed the rest but paid the closing costs out of pocket so nothing was rolled in.
Now, I am refinancing my home and again doing a 95% loan to value ratio (with closing costs rolled in it's 95%) and my PMI will be $177. According to the bank the PMI goes according to the loan to value ratio..so if it was 97% loan to value ratio, the PMI would be more money. At first they estimated my PMI as $240 for my refi and I was flipping out b/c I'm taking out the same LTV ratio as when we purchased the home with a lower interest rate obviously but then when we received the commitment and the ready to close clearance the cost is $177. The bank told me PMI has gone up since 2009 when I closed on the purchase of my home. CuriousGeorge may be paying more in PMI b/c it's FHA loan. FHA loans accrue more closing costs. I know all of this b/c I work for a real estate law firm. So I do have some knowledge but we don't do FHA loans here..never have. The bank told me all of this info when I was thinking of going FHA but I ended up conventional each time b/c our credit was amazing and I didn't want to pay more out in closing costs. Our conventional loan closing costs were $11,000 wherein Curious George said $15k. It all depends upon taxes and escrow and your loan payment too though. Hope this helps with your question.
Last edited by LIgirl74; 05-23-2013 at 12:50 PM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
