Home Buying in 95823>Question Details

Amy, Home Buyer in Sacramento, CA

Hi...I am buying a home $200,000 with $6000 down through FHA program. The seller has agredd to pay 3%

Asked by Amy, Sacramento, CA Mon Nov 10, 2008

towards closing costs. Their Hud-1 has me paing $4000...does this sound right? I thought with their 3%, I should not be paying out of pocket at the end?!?

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Jim Walker’s answer
I will state the obvious up front, the down payment is NOT part of the closing costs. Never is, never was.

I hope you were not expecting the seller could pay any part of your down payment. It is not allowed by FHA, even if the seller wants to.

It is normal for closing costs to eat up anywhere from 3 to 6% extra over the purchase price. Those closing costs are above and beyond the down payment requirement.

Sellers are allowed to contribute funds toward the closing costs but not a cent to the buyers down payment.

FHA loans are more complicated than conventional loans. There is something called mortgage insurance premium (MIP) that is added to the base loan amount. This MIP charge complicates FHA loans enormously for escrow and loan officers and for buyers.

You have a base loan amount, then there is the total loan amount which is base plus MIP.

The MIP is financable - that means you can add it to the loan balance. This of course increases your loan balance and the amount of your monthly payment. Is this what your extra $4,000 is?

Or. If you put up $2,000 as the initial deposit - and you are now being asked to bring in $4,000. Well this is simple math 2 + 4 = 6.
That would sound right, - the balance of the down payment....
0 votes Thank Flag Link Mon Nov 10, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
you will need to have your buyer broker and the closing attorney go over the costs that are on your hud. Make sure all of your credits are listed properly including your deposit you paid with your offer. Your mortgage broker could be charging you points which it it was 2 points there would be your $4000. you should ask your loan officer to detail what costs they added to your loan. good luck and congratulations on your purchase.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Nov 10, 2008
The HUD-1 was an estimate as others have said. Have your lender, or the title company review it so that you can see how it reflects exactly the terms of the contract. There should be a $6,000 credit. That money would be applied to your closing costs, prepaid taxes, interest and insurance. It should be close to covering all of your costs.

However, if you (for example) were buying down the rate of your loan, or had extremely high commissions for a lender, or had agreed to pay some other costs,..... then you could still need to pay some money at closing.

Make sure someone explains it to you, and hopefully before you go to the signing. As you're not familiar with it, it might make it easier to absorb if you try to do it ahead of time.

Good luck and congratulations.
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Mon Nov 10, 2008
Is it possible that the estimated HUD-1 does not reflect a credit for your initial earnest money deposit?? It is not uncommon that they contain errors or duplicate charges...The title company should have emailed you the estimated settlement statement, along with your agent and loan officer. Ask them to review it with you.
Congrats on your new home!!

Erin
Web Reference: http://www.erinattardi.com
0 votes Thank Flag Link Mon Nov 10, 2008
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
Contact
It could be a mistake. Call your escrow officer and ask, providing your agent doesn't have an answer. With the way so many title companies are short-handed right now and the tremendous amount of volume so many escrow officers are handling, mistakes are routine.

I see glaring errors on almost every single closing statement lately. Sometimes more than one thing is wrong. They forget to include even the most common items such as an earnest money deposit! It's incredible the way business is being conducted lately.
0 votes Thank Flag Link Mon Nov 10, 2008
Hello Home Buyer,

Without looking at your HUD 1 statement I can not give you the proper answer. I would suggest you speak with your Mortgage Officer or Attorney and have them explain this to you.
0 votes Thank Flag Link Mon Nov 10, 2008
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