Closing Costs Questions

[Anonymous]

The realator works with this guy that was a banker that got loans for people. She 'cleans up credit report' and finds the house and he finds the loan. Hime finding the loan is what cost the 250.  I've never purchased a home or thought Id be able to and no one in my family has purchased one before so I thought this was standard procedure. Next time... I'll do research first THEN look into the loan. Geeze. I am so dumb sometimes. I know that I have several more hoops to jump through. I've heard the VA can be really picky about the condition of the home. I know the facia boards need to be replaced and the car port needs some wood work etc. The realtor keeps giving me conflicting answers on this process. I'm stashing money away about one to two thousand a month for closing costs etc. Not sure if I am looking at a bigger bill from the sellers lender or what. I am hoping this doesn't turn into a six month wait only to get something unreasonable from the bank. lol Wouldn't that be the luck!!!!

[StartingOver10]

It is normal for the lender to charge an application fee up front and then give you credit for it on the closing statement. I am assuming it is an application fee. It is not normal for the Realtor to collect the application fee though - it is paid directly to the lender at time of application. Is it a mortgage broker that you are working with for this loan?

The house does have to pass WDO - which is the termite report. It can't have wood rot either. That will need to be repaired prior to closing. The systems have to work too: HVAC, electric, plumbing. Some short sale sellers have the resources to repair. Others don't. Address this issue now before you get into it too deeply. It won't do any good at all to have lender approval by the sellers' lender and then not be able to close due to wood rot. The seller's lender doesn't make repairs. The seller may if they have enough notice. Sometimes the buyer pays to have a handyman repair prior to closing, but not before sellers' lender approval on a short sale. That is a negotiated expense and not one to take lightly. It depends on the whole deal you are getting. If it is worth it, then strongly consider paying for repairs if the seller can't or won't repair it at their expense. If not, then you would have to walk away IMO.

[Anonymous]

Hi:

The 250 was to the guy that found me the loan. Which in retrospect he didn't really do anything. But, lesson learned there. lol. Every peice of paper that I gave him, I had to turn around and resubmit to the loan officer. lol.

Okay, so I shot an email to the relator and asked her if she had followed up with the listing agent to at least ask if the sellers were aware that the VA was going to want certain things fixed and this was her reply:

"So all that gets addressed after they accept offer. When we do the home inspection... which we can't do until the bank accepts offer. Once we do inspection we will ask for all that and some of th elender credits will be used to fix that. The pest stuff too."

The issue I have with this is just like you mentioned.... if the seller doesn't have the resources to fix things which I am thinking there is about 4 thousand worth of repairs, then i don't want to be waiting six months. Also.... she keeps talking about lender credits and I've asked her multiple times what those credits are and she can't seem to answer me. I'm about ready to call her office and do a little Whiskey Tango Foxtrot but I know that accomplishes nothing. I know they are getting irritated with my questions yet they won't take the time to meet up to answer them and all I have is time to think. lol What lnders credits is she talking about? I do know that NOTHING is free. Is this a credit that just gets tacked onto the loan or something? What am I missing?

[StartingOver10]

Ok. Two things bother me about your last post.

1) Her "partner" collecting a fee of $250 to find you a lender for your loan is a RESPA violation if he is a licensed Realtor.

2) When the short sale is negotiated, the 'credits' are negotiated at the same time. In other words, the contract offer you signed and the seller signed is then negotiated with the servicer of the loan. They are looking at the whole deal. You can't come in after the deal is negotiated and add credits for condition after the deal is negotiated because the sellers lender expects you to have worked that into your offer up front.

For example:  SP is $X and "seller" will pay 3% of purchase price toward buyers closing costs and prepaid expenses.  BTW, that is what is allowed, a credit toward your closing costs, not toward repairs.  If you word it toward repairs, that will kill your deal. 

Has this agent ever done a short sale before?

[Anonymous]

Hi There:

I responded to her email and said, "The lender didn't tell me I have any credits." and this was her reply: "It's because of the VA. Whatever you qualify for. After we figure out what is needed and applicable."

She speaks in riddles.

Anyhow, the person the 250 went to is not a relator, she and he have some sort of business going on where he secures the financing and she finds the homes. The only thing written in my offer was for 1k towards closing.

[StartingOver10]

Have you been qualified by your lender already based on the likely final bank approved price of the home you have under contract?

If you only have $1k in the contract to be paid by the seller do you have the rest of the closing costs you will need to close?

These are all worked out in the beginning before you make an offer so that you don't get into the middle of the deal and find out you can't afford it.

It is difficult enough when you are working with a short sale because the seller's lender can sometimes want more than the market value of the house, at least in my area of S Florida they are now asking and getting in some cases more than market value. The issue with that for you is that you are getting a VA loan and your appraisal has to come in at the purchase price or more. Your lender will base your loan on only the purchase price or the appraised value, whichever is lower.

The good news is this: if the appraisal comes in lower, the short sale negotiator can go in and try to re-negotiate the purchase price to meet the appraised value. Most of the time, but not always, the short sale lender will then agree to the reduction in price.

[StartingOver10]

I see my answer wandered from the question last night - it was late and I didn't stay on topic for you.

Your question is about credits and the VA loan.

There are only two places to get a credit:  1) from the seller and 2) from the lender.  If you are getting a credit from the seller you have to put it in the contract right up front. If you are getting it from the lender, then they bump the rate and pay a small portion of your closing costs. That part doesn't have to be done in the contract.

I am still unclear on this person getting a fee to find you a lender - I haven't heard of that except in the case of a licensed mortgage broker and a mortgage broker gets paid at closing.

I can see where your confusion is coming in though - your agent isn't answering your questions directly if your post is any indication. Her answer doesn't make sense to me since you have to put the closing cost credit in the offer you sign for the seller to sign off and the seller's lender to approve. If you need funds from the seller to close, then the time to amend this offer is now, before the lender's approval of the short sale. You won't get a credit that you don't ask for right in the contract up front.

[Anonymous]

Hi There: 

I am not sure if the other guy is licensed. He used to secure loans for people when he worked at a bank prior to going out on his own. Know I know what to watch for if I ever have to do this again. lol As far as the closing costs. I have the closing costs, but I was trying to calculate what they would be on the 125k loan versus the 155 that they wrote the initial disclosure for. They projected 9500 on the 155k loan so I was wondering what the cost would actually be for a loan that was only 125k. .