U.S. CitiesCity-Data Forum Index
Covid-19 Information Page
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
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.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 02-16-2011, 10:58 AM
 
1 posts, read 4,941 times
Reputation: 13

Advertisements

Hello All,

Here is my situation, I am on a contract to buy a house for $300,000 and the seller (bank owned) has accepted to offer $9000 (3%) in seller subsidy. In the meantime, I found a lender who is willing to do a no closing cost loan. My loan is for $240,000 as I put 20% down (ie., $60,000). Could you please advice me on how wisely use this seller subsidy?
Should I re-negotiate the price with the seller ? (reduce the price to $291,000) or is there any other way to use this $9000? Please help.

Additional Details
My interest rates are the same with or without fees. My loan details: 15 yr fixed rate mortgage and even If I buy points (max:1.25) to lower the rate, still I end up with a closing cost of ~$6000 meaning $3000 remains unused.

Last edited by andy_milr; 02-16-2011 at 11:48 AM.. Reason: additional details
Rate this post positively Reply With Quote Quick reply to this message

 
Old 02-16-2011, 11:14 AM
 
Location: Lakewood Ranch, FL
5,636 posts, read 9,035,358 times
Reputation: 6839
You need to check to see how the contract was worded. In theory, if it says that you get up to $9000 toward closing costs, you could be out of luck. That's not to say that you can't try to get it as a straight forward credit but I have a feeling that they won't automatically have to give it to you. In practice, it seems like no one ever pays attention to this stuff and it just goes on as a straight credit anyway! Once you've signed the contract, though, you are done unless there's something in the contract allowing you to renegotiate. Disclaimer: I'm not an attorney and forum advice is not a substitute for seeking legal advice from an attorney.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 02-16-2011, 11:23 AM
 
4,966 posts, read 12,566,657 times
Reputation: 3762
Quote:
Originally Posted by andy_milr View Post
Hello All,

Here is my situation, I am on a contract to buy a house for $300,000 and the seller (bank owned) has accepted to offer $9000 (3%) in seller subsidy. In the meantime, I found a lender who is willing to do a no closing cost loan. My loan is for $240,000 as I put 20% down (ie., $60,000). Could you please advice me on how wisely use this seller subsidy?
Should I re-negotiate the price with the seller ? (reduce the price to $291,000) or is there any other way to use this $9000? Please help.

You could use it to 'buy the rate down'. Or, if you want to escrow, a combination of buying the rate down and covering the escrow impounds and first year of homeonwer's insurance.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 02-16-2011, 11:52 AM
 
Location: Plano, Texas
1,675 posts, read 6,622,307 times
Reputation: 693
Quote:
Originally Posted by andy_milr View Post
Hello All,

Here is my situation, I am on a contract to buy a house for $300,000 and the seller (bank owned) has accepted to offer $9000 (3%) in seller subsidy. In the meantime, I found a lender who is willing to do a no closing cost loan. My loan is for $240,000 as I put 20% down (ie., $60,000). Could you please advice me on how wisely use this seller subsidy?
Should I re-negotiate the price with the seller ? (reduce the price to $291,000) or is there any other way to use this $9000? Please help.

You are aware that with a no cost loan you are taking a higher interest rate? On a no cost loan, it is not that there are no closing costs. The same closing costs will be there. What the lender does is they give you a higher interest rate and they pay the closing costs for you.

At the higher interest rate, when the lender sells your loan into the secondary market, they get paid on the back side. The end investor will make more interest off of you and they are willing to pay the lender.


Either way, the consumer always pays the closing costs. They either pay the closing costs or they take a higher interest rate and pay more interest over the life of the loan.

if you are keeping this home for less than 3 years, a no cost loan is a great option. If you are keeping this home for a longer time, you should pay the closing cost and get the lower interest rate.

If your rate is the same whether you pay or the bank pays, i would suggest you contact another lender. The rate with no costs will be higher.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 05-04-2014, 03:42 PM
 
1 posts, read 2,333 times
Reputation: 10
I'm purchasing a bank approved short sale for 250,00.00. Bank didn't approve 3% towards closing so to get closing it was added to the list price of house. Will I benefit at the end?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 05-05-2014, 10:02 AM
 
3,806 posts, read 8,283,184 times
Reputation: 4948
Quote:
Originally Posted by JRGORDON View Post
I'm purchasing a bank approved short sale for 250,00.00. Bank didn't approve 3% towards closing so to get closing it was added to the list price of house. Will I benefit at the end?
Benefit is a relative term here. It's added to the price, therefore depending on your down payment, a good portion of it is rolled into the loan. If it helps optimize your cashflow so as to facilitate the deal, then yes. But it's not like they are paying anything out of pocket, you are still paying it, you are just paying MORE for it because you are paying interest over time for it.
Rate this post positively Reply With Quote Quick reply to this message
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.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2020, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top