Understanding Commitment Letter..Shane,Dallasloanguy, help?

[Anonymous]

Just got my commitment letter today for FHA from Wells Fargo.  It is Friday night, received this via email from mortgage guy, and I don't understand it, and can't talk to him until monday.

1.  It says in the first paragraph loan amount $158,746.00 for 360mths at 6%(not locked).  No origination fee but then "For an FHA loan, Buyer must either pay or finance the up-front MIP of $2,346.00 and must pay a monthly MIP charge to start at $64.80 per month." but under Approval Conditions it states. " Lender to receive a fully executed purchase agreement, including all addendums, with a minimum sales price of $160,000, All terms must be acceptable to the lender. and then it states, "Lender to receive an acceptable appraisal report indicating a market value of $160,000."  So, does that mean I have to buy a house that is 160,000 or more?  Also what is with the approval for 158,746.00?  I know FHA requires 3% down, which would be $4800 on 160,000, but 160,000 minus 158,746 is only $1254 dollars.

Under payment of Fees section it states, "By accepting this commitment, Buyer/Seller agrees to pay all closing costs including recording fees, mortgage registration tax, tax service fees, fees or premiums for title examination, abstract of title, title insurance, survey expenses, appraisal fees, private mortgage insurance(if applicable), cost of credit report, document preparation fees, and attorney's fees (if outside consel is engaged by us)."  But later it states:  The following are closing conditions that must be satisfied at the time of loan closing: 1. Seller may contribute $1,000.00 towards the borrower's closing costs. then, 6. Loan amount based on $723.50 of borrower paid closing costs.  If actual borrower paid closing costs per HUD-1 are less than $1,200, loan amount must be adjusted by underwriter....then *. If cash to close exceeds $14,583.00 the loan must be re-underwritten."  So, this means we cannot ask seller to pay all closing?  If this is the case, I do not have 3% down plus 4,000-6,000 for closing.  Can this be financed in?  When I first spoke with the broker he quoted me I would need approx $6200 out of pocket expence, which I assume is the down payment plus MIP, Can anyone help me understand?

Thanks in Advance!

Message Edited by skkdedwards on 05-03-2008 03:35 AM

[nicemann]

The MIP can be financed in.  That is why your loan would be more then 155,200 (160-3%).  It still does not add all the way up though.  Not sure what other fees they may be including.  As for the seller paying the closing costs.....yes they can.  Even if the thing says "$1,000" they can still pay it all.  My was written the exact way and they will be paying for it all.  Now keep in mind you still have to have a appraisal with an FHA appraiser so that will be about $400.  I did both an inspection and an appraisal since the house was about 5 years old.  Wanted a detailed check.

[DallasLoanGuy]

The minimum borrower commitment is 3%

And the upfront MIP can be financed.... that is why those numbers dont add up.

It looks like they approved you for $160K(you can buy less)

If you have a contracted sales price of 160 or less, you qualify. do you need more?

Seller can pay up to 6% of the contracted sales price back to you by paying closing costs and prepaids.

Seller can also contribute to a down payment assistance charity which can gift you the down payment.

There is no way to know what the broker has set up without seeing a gfe. did you get one?

you have a lot of options and can set your deal up the way you want.... it doesnt sound like your broker took the time to walk you thru the process, sadly