Posted on: 11th Jul, 2007 01:26 pm
Few people told me that I can get the earnst $$$ back at closing if seler contribution covers more than closing cost. My seler is agreing to pay upto $4400 & closing costs are estimted to be about $3900. Now my broker is saying that I will have to come up with at least $500 & when I asked if I would get it back she said I won't even when seler is oferring to pay more than what closing will be actually for. Its a fannia mae loan. Any ideas?
I don't know which Fannie Mae loan you have but for Fannie Mae Flexible 100 program it is required for the buyer to make $500 contribution towards closing costs.
And you can only get back what you contribute. If the seller is contributing $4400 and actual comes to $3900 then the excess will return back to the seller. At closing you can only get back the amount of your contribution and not more than that.
Miller
And you can only get back what you contribute. If the seller is contributing $4400 and actual comes to $3900 then the excess will return back to the seller. At closing you can only get back the amount of your contribution and not more than that.
Miller
Your seller is putting in $4400 for your closing costs and if actual costs stand at $3900, then his contribution will be up to $3900 and the balance will return back to him.
If your mortgage is not Flexible 100 program but some other program like MyCommunity loan which does not have any minimum borrower contribution, and you put earnest money $500, you will be getting that back if all closing cost is covered by seller's contribution.
But as Miller said it is likely a Flex 100 as you are required to bring in $500.
If your mortgage is not Flexible 100 program but some other program like MyCommunity loan which does not have any minimum borrower contribution, and you put earnest money $500, you will be getting that back if all closing cost is covered by seller's contribution.
But as Miller said it is likely a Flex 100 as you are required to bring in $500.
Hi Stewart,
During the transaction, have you signed any agreement either with the seller or the broker that you will get back your earnest money back at the time of closing? In some cases, the deposit is often refunded to the buyer and is used as a credit toward closing costs. So, carefully read your contract as the laws vary from state to state. In that case, if the seller refused to return the deposit without any cause, the seller could end up paying a penalty to the buyer.
During the transaction, have you signed any agreement either with the seller or the broker that you will get back your earnest money back at the time of closing? In some cases, the deposit is often refunded to the buyer and is used as a credit toward closing costs. So, carefully read your contract as the laws vary from state to state. In that case, if the seller refused to return the deposit without any cause, the seller could end up paying a penalty to the buyer.
if you be interested stewart - fannie mae flexible 100 program :- curealty.org/fannie_mae_flexible_100_programs.htm
my real-estate agent is trying to tell me that if I get the seller to pay for my closing cost essentially I end up financing the cost because I have to make my offer larger to counter it out.
This is confusing to me; I feel that when you have the Seller pay your closing cost that money comes off their bottom line and I have nothing to do with it. could somebody please help me understand where my logic is incorrect.
This is confusing to me; I feel that when you have the Seller pay your closing cost that money comes off their bottom line and I have nothing to do with it. could somebody please help me understand where my logic is incorrect.
keith, i agree with you in principal. however, most transactions that take place will have you paying the full asking price, for example, with money back to you for closing. that's in opposition to the "old way" of bidding lower on the property and simultaneously asking for help with closing. so now, if you see a home listed at $105000, the likelihood is that if you want closing costs assistance, you'll buy for $105000 and get, let's say, $5000 back, as opposed to simply paying $100000 with nothing back. you could do it either way.
it's not a bad idea, by the way to pay full asking price and get money back, because the immediate savings is quite nice, while the difference in overall payback is negligible - a few dollars a month for instance.
so you logic is not incorrect, but what your agent has described is the more common method of purchasing these days. if you want money back you pretty much have to pay the full price instead of requesting a discount from the price.
i hope this is reasonably understandable; come back with more questions if necessary.
it's not a bad idea, by the way to pay full asking price and get money back, because the immediate savings is quite nice, while the difference in overall payback is negligible - a few dollars a month for instance.
so you logic is not incorrect, but what your agent has described is the more common method of purchasing these days. if you want money back you pretty much have to pay the full price instead of requesting a discount from the price.
i hope this is reasonably understandable; come back with more questions if necessary.
So George, I understand what you're saying however cash back is nice in the beginning however having a higher monthly payment isn't and that's what I can't understand. Instead of closing cost being a flat 7k it will more than likely cost a significant amount more stretched over a 30 yr morgage. Correct. So it seems saying the seller will pay for your closing cost is incorrect terminology because the buyer is actually financing the cost. Correct?
Keith,
You are correct. You are, in effect, financing the closing costs that the seller pays because your mortgage is higher.
There is no requirement to have the seller pay closing costs. It is a way of helping people buy a house when they do not have enough cash on their own to pay for the down payment and all the closing costs.
Some buyers have enough income to qualify but not enough cash. In that case, the "slightly" increased mortgage payments are no problem.
Some people have the cash, but, want to keep some in savings because life is easier when you have some reserves for emergencies.
If you have the cash and don't want the higher purchase price and therefore the higher mortgage, do not do it.
You are correct. You are, in effect, financing the closing costs that the seller pays because your mortgage is higher.
There is no requirement to have the seller pay closing costs. It is a way of helping people buy a house when they do not have enough cash on their own to pay for the down payment and all the closing costs.
Some buyers have enough income to qualify but not enough cash. In that case, the "slightly" increased mortgage payments are no problem.
Some people have the cash, but, want to keep some in savings because life is easier when you have some reserves for emergencies.
If you have the cash and don't want the higher purchase price and therefore the higher mortgage, do not do it.
