OK maybe some of you mortgage people can tell me how to handle this?
Accepted offer to purchase of $239,000. Seller agreed to pay VA max of 4% toward closing cost, prepaids, etc. ($9560)
Now after home inspection we find out that home needs a new hvac unit on second floor along with other requested maintenance repairs the total comes up to $7355.
Our loan officer says we can not get a credit at closing for the repairs because we are maxed out at 4% seller contributions
However seller does not have money to do repairs but would take proceeds out at settlement too pay for repairs. (Children/Trustee selling family home)
Any suggestions on how to handle this?
Generally, it is never a good idea to have seller do any repairs after closing because they will ignore you once the deal is done. If they know they will make profit from selling the house, why cant they borrow money to get the repairs done? Avoid verbal promises in any mortgage deals. If I were you I will not accept such a promise because there is incentive for them after closing to even worry about you. Just my 2 cents.
Do you have the funds yourself to do the repairs, if so how about knocking $7,460 off the price of the home?
Well yes we do have the money to do the repairs, however it would eat significanly into our reserve fund that was set aside for remdeling and updating kitchen. And at a loan rate of 5% it doesn't make good econmical sense to do that. It would take over 151/2 years to recoup that cash outlay. ($7355 divided by $39.49 per month of savings by not financing)
Also it's not a case of waiting until after closing for seller to do repairs. Seller has agreed to issue a credit to me of $7355 at closing so I can do repairs. however because I am already getting 4% seller concessions toward closing costs I do not believe the lender will allow the credit to be given to me. I am getting a 100% VA Loan and I am using the majority of the 4% to pay the funding fee (3.3% second use) . I don't think the lender is going to let me leave the closing table with an extra $7k+ in my pocket
VA does have a loan program that will finance repairs into the loan amount, it's not a very common one, and personally I don't know of any VA lender doing it... however it does exist. Your VA RLC (Regional Loan Center) may be able to point you in a direction of a lender who has recently closed on, it would mean going to a new lender, but would be a way you could buy this home and get the repairs financed rather than paid out of pocket. The list below will let you know what RLC covers your state
Ok. Let's try this again
Seller "wants" to give me $7355 at closing to do repairs (Children/trustees selling home for mother) instead of doing them himself.
Sellers are already giving me 4% of sale price for closing ($9560)
How do I get both the 4% ($9560) and the repair credit ($7355) on a VA home loan of $239,000
You could see if these would qualify for energy efficient improvements, if so then up to $6,000 can be financed ON TOP OF the loan amount you are already getting. The additional money over $6,000 would need to get prior approval by the VA RLC that covers your state before it could go through though.
Alternatively, the seller could place $7,355 in a separate escrow account that would be held by the title/escrow company... the repairs would be done, the title/escrow company would then disburse the funds to the general contractors who did the work. Contractors would have to be OK getting paid after the fact though.
Not all lenders support/OK that (even though it's perfectly fine with VA), so ask if your lender would.