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 04-26-2009, 02:19 AM
 
3 posts, read 20,072 times
Reputation: 10

Advertisements

Hi all,

My mother is facing foreclosure on her home in June and I am attempting to purchase it to save the $120K of equity she has in it. Planing to buy it at $200K. In this situation she will gift me the down payment of $40K (out of the proceeds), however the mortgage company says that they need proof that I can pay the closing costs, which should come in around $9K. I can get a loan from a friend, but according to the mortgage company any large deposits into my account need to come with a gift letter. My friend and I are hoping to avoid having to lie and stating that it's a gift, when truthfully it is not. Here's my question, if I draft up a sale contract in which I state that the seller will pay all closing costs, should that absolve me of proving that I have assets to pay them? My loan officer didn't mention this option which implies to me that they won't accept it. Are they being unreasonable in requiring me to pay the closing costs rather than taking it out of the sale proceeds? I'm just not sure how typical it is for the seller to pay CC... Any advice would be very much appreciated.

Thanks,

George
Rate this post positively Reply With Quote Quick reply to this message

 
Old 04-26-2009, 07:41 AM
 
Location: A little suburb of Houston
3,702 posts, read 16,901,294 times
Reputation: 2075
They are trying to make sure that you have the funds to make the payments once the purchase is complete, they want to avoid foreclosure again if possible. I doubt they will allow this. I am surprised they will even allow any gift funds. If you do not have the money to pay closing, they may be well justified in their position and this may not be the right thing to do for you.

Note that I am not an expert, but I bet some more knowledgable folks will get on here and give you better answers.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 04-26-2009, 08:56 AM
 
Location: The end of the road Alaska
860 posts, read 1,827,317 times
Reputation: 1757
I'm wondering if your mother could re-finance with you as co-borrower. Would that cut those horrible closing costs down?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 04-26-2009, 09:10 AM
 
291 posts, read 835,029 times
Reputation: 170
The seller can pay your closing cost just not your down payment. Amend the contract to state this or include it in the contract when it's written.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 04-26-2009, 01:06 PM
 
163 posts, read 625,584 times
Reputation: 85
I would think that whomever you use your lender/broker would help you with this task as when I went through the home buying they helped me out as far as deposits of large amounts and gifts and what not.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 04-26-2009, 02:26 PM
 
3 posts, read 20,072 times
Reputation: 10
Thank you all for taking the time to reply. Here's a little more background info for reference. I'd be taking out a loan of $160K to buy the house, but we're setting the purchase price at $200K to include the gifted down payment. From the proceeds, my mother will pay off her mortgage of around $80K, pay around $20K of credit card debt, and then (hopefully) the closing costs, leaving around $50K of extra cash for her. We're planning to place about half of this (around two years of payments) into a separate account from which mortgage payments will auto-debit. They can count most of this as "rental income" for me which will help me qualify. I make $40K/year, have about $200/month in student loan obligations and my credit is 798, but all of my meager savings has gone to my mom for living expenses, and I can't afford to pay the closing costs. My mom has unfortunately been out of work for quite a while and her credit is pretty beat up, so I don't see how she can qualify for a refinance even if I cosign. Plus she needs some extra cash buffer since she's still out of work. Buying her home seems like a reasonable solution for us as it gives her access to liquidity and minimizes my risk (price could drop $40K if I need to sell it), but the closing costs are proving tricky. Based on this additional information, do you guys agree that they should still require me to pay them instead of taking them out of proceeds? Just trying to come up with all of my options.

Thanks,
Rate this post positively Reply With Quote Quick reply to this message
 
Old 04-27-2009, 04:16 PM
 
3 posts, read 20,072 times
Reputation: 10
Just in case anyone's curious, it turns out that we can just stipulate in the sales contract that the seller will pay the closing costs, and that will do it. Thanks for your help,

George
Rate this post positively Reply With Quote Quick reply to this message
 
Old 04-28-2009, 07:08 AM
 
Location: A little suburb of Houston
3,702 posts, read 16,901,294 times
Reputation: 2075
Quote:
Originally Posted by equitysalvage View Post
Thank you all for taking the time to reply. Here's a little more background info for reference. I'd be taking out a loan of $160K to buy the house, but we're setting the purchase price at $200K to include the gifted down payment. From the proceeds, my mother will pay off her mortgage of around $80K, pay around $20K of credit card debt, and then (hopefully) the closing costs, leaving around $50K of extra cash for her. We're planning to place about half of this (around two years of payments) into a separate account from which mortgage payments will auto-debit. They can count most of this as "rental income" for me which will help me qualify. I make $40K/year, have about $200/month in student loan obligations and my credit is 798, but all of my meager savings has gone to my mom for living expenses, and I can't afford to pay the closing costs. My mom has unfortunately been out of work for quite a while and her credit is pretty beat up, so I don't see how she can qualify for a refinance even if I cosign. Plus she needs some extra cash buffer since she's still out of work. Buying her home seems like a reasonable solution for us as it gives her access to liquidity and minimizes my risk (price could drop $40K if I need to sell it), but the closing costs are proving tricky. Based on this additional information, do you guys agree that they should still require me to pay them instead of taking them out of proceeds? Just trying to come up with all of my options.

Thanks,
What you are describing is a really, really, bad deal for you...not so good for mom either. I wish you the best of luck, but really think this will repeat itself in 2 years or less w/ your neck in the noose.
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
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6. The time now is 04:38 PM.

© 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