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What an emotional day. My DH is gone this week for his step-dad's funeral in FL. He was scheduled to be back by tonight so we could close Monday. Yet, they moved the closing date to today. I had to do a power of attorney in order to sign for him. My notary showed up today and we started signing papers. I got to the page where it broke down all those wonderful fees- we agreed to pay closing costs. Turns out, the closing costs equaled less than the allowed 4500 so they took the remaining and paid off his car. So, this first time home buyer is walking away with a car that is paid off, his new home, and the 8k tax credit. He supposedly had no money to put down on the house what so ever- so it was a VA loan. I am totally baffled how I broke even and he gets a car paid in full, plus 8k, and the home.
I'm surprised your Realtor didn't advise against some of the things you did or at least have you protected in your contract to purchase. In TN one party can't move the closing date up unless both parties agree to it in writing. Also, I'm surprised your contract didn't disallow funds to be used to pay off a car as this had nothing to do with closing costs. How was this handled on the HUD-1? Something doesn't sound right here.
Maybe I'm wrong, but you sign a contract (when you took his offer) agreeing to pay a certain amout for closing costs. It's not up to you what the buyer uses it for, considering you agreed to give him that amount of money in the first place.
Maybe I'm wrong, but you sign a contract (when you took his offer) agreeing to pay a certain amout for closing costs. It's not up to you what the buyer uses it for, considering you agreed to give him that amount of money in the first place.
Actually, according to the OP, the $4500 was specifically for closing costs. The car pay off has nothing to do with closing costs.
Actually, according to the OP, the $4500 was specifically for closing costs. The car pay off has nothing to do with closing costs.
Perhaps the buyer's lender required the car loan to be paid in order to qualify for the mortgage. That may be construed as a necessary closing cost for the loan package.
It's a buyers market. You may want to be thankful you broke even in the end and consider yourself lucky as well.
I am in negotiations with a woman selling a condo for less than 300,000 when she paid nearly 600,000 for it just 3.5 years ago -- oh and she has agreed to pay closing costs.
Perhaps the buyer's lender required the car loan to be paid in order to qualify for the mortgage. That may be construed as a necessary closing cost for the loan package.
And how is this going to show up on the HUD-1 if it was a closing cost?(not that I believe it was). I would that would be somewhat problematic.
VA loans allow sellers to gift monies to buyers for a variety of things including paying off debt. Whether or not they can shift the closing costs to other items depends on the wording of the contract.
Perhaps the buyer's lender required the car loan to be paid in order to qualify for the mortgage. That may be construed as a necessary closing cost for the loan package.
I'm surprised the lender would allow this since IMO it falls into mortgage fraud. Most lenders are having to be extra careful & clean on what they do and this does not sound kosher.
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