Home Buying in 92395>Question Details

Home Buyer, Home Buyer in 92395

I'm buying a house, and I am $1000 short on closing costs. How I can close without any more of my money?

Asked by Home Buyer, 92395 Fri Nov 12, 2010

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Sindy Verdugo’s answer

There are many people making lots of money in a transaction. If everyone in the transaction threw in a couple hundred you would be there.

Do an email shout out to everyone involved in the transaction. Ask your agent to head up the hat passing. If your agent puts in $250 maybe the the seller, the sellers agent and the lender will do the same.


Web Reference: http://www.SindyVerdugo.com
0 votes Thank Flag Link Sat Nov 13, 2010
Robin, I believe my answer was correct and I'll admit I was responding right after experiencing a very frustrating situation - a buyer has just forwarded me the Good Faith Estimate from a mortgage banker. No YSP was quoted, nor any kind of credit. Legally, no disclosure was necessary. When I priced out the loan there was easily 2.5% being paid to the lender issuing the quote - and this was on a $500k FHA loan. I now work for a mortgage bank but I continue to issue Good Faiths showing the YSP/SRP so their is full disclosure to the client. In this case it was to show the client they should have been receiving over $10,000 in credit from the lender for the rate that was quoted. I can only assume the Loan Officer or their branch was happy to keep all that undisclosed SRP.

I don't know about you but I think a $10k commission to a Loan Officer is ridiculous. I certainly couldn't look a client in the eye and explain how my services were "worth" that much.
0 votes Thank Flag Link Sat Nov 13, 2010
Home Buyer,

If the seller doesn't want to contribute to the shortage. Do you know of a family member that can gift you the grand? If so, you might want to ask for an extention of closing. This extra process might take acouple of days to be reviewed by an underwriter. Been there. Usually, the escrow is padded. If the seller is contribuiting 3%, it should be more than enough to close.

Best of luck,

Jes Sierra, B.Sc.
Realtor® 01772408
0 votes Thank Flag Link Fri Nov 12, 2010
Michael, you are not exactly correct about a broker vs. a bank giving credit towards closing costs. The difference is that the broker has to disclose the YSP, and then credits that. However, most of the time, that is what would really be considered the rate that the bank gives without charging points. Any bank could also give the credit, however this may depend on their individual policy, and what the size of the loan is. I think if everyone involved put their heads together, Home Buyer could come up with something.
It is true that you cannot borrow from a credit card to pay costs.
0 votes Thank Flag Link Fri Nov 12, 2010
Yes, I agree about trying to see if the seller might be able to give you some sort of a credit. After all, it is in his or her best interest to get this deal closed as well, so the seller may be able to contribute some funds to help it close.

Often escrow will pad their numbers too -- I would double check with them to make sure the extra $1K isn't absolutely necessary. If so, perhaps a short term loan from a relative might be an option as well. Whatever you choose to do, do it outside of escrow so that nothing funny happens with your loan in these few days!! Good luck!
0 votes Thank Flag Link Fri Nov 12, 2010
It depends on where you are short. If you are short on a down payment, your lender will require to you to contributed a minimum down. If it is on closing cost, verify that the original GFI, good faith estimates are correct. If it is on reserves talk with you lender to come up with a possible solution. What ever you do , DO NOT change your debt to income ratios. Talk with your lender, if you pull from savings or charge on a credit card, your loan could be denied.
0 votes Thank Flag Link Fri Nov 12, 2010
If you're at the closing table and short to cover your actual costs to complete the purchase, you've got a problem. Depending on where in the process you're at, you can usually negotiate some of the costs with the seller. I've seen some ingenious buyers make a run for the commission, but that is playing unfairly, if you ask me. If you haven't already done this -- ask mom or dad for a short term "gift" for the shortage. However, any lender who is processing your loan wants to verify that you have ALL THE FUNDS you'll need to close, so this one is a mystery if you got far enough to close without the funds.
0 votes Thank Flag Link Fri Nov 12, 2010
There may be even a simpler answer depending upon your loan - you can usually get a credit from the lender for closing costs by trading up in interest rate. If you are working with a bank or credit union they may not have disclosed this fact to you (by law they don't have to) but a broker is required to do so.

The amount you are short is pretty small and wouldn't take much of a trade up in rate. The only caveat is if your loan balance is small.

For example, I was working with a buyer on an FHA loan today who got a quote from another lender - 4.25% and no credit towards closing costs. It was a bank so no harm. However, we had wholesale lenders paying a credit of almost 2% of the loan amount. If your loan was $200,000 that would be a $4,000 credit towards your closing costs.

Ask you lender what the rate would be to accommodate the $1,000 credit you need. If you have specific questions about this, just post back to the forum.
0 votes Thank Flag Link Fri Nov 12, 2010
Are you currently in escrow? If so this should have been determined before making an offer by reviewing your good faith estimate with your lender. (Or perhaps the estimate was off somehow?). You can always renegotiate for the seller to credit you the $1,000. They are typically allowed to credit the buyers closing costs up to 3% of sales price.

Another option if you are a first-time buyer you can look into the CalHFA program which can assist you with 3% of sales price towards downpayment or closing costs.
0 votes Thank Flag Link Fri Nov 12, 2010
You could see if you can get the seller to contribute $1,000 towards closing costs. If this is a short sale or REO property, that may not be possible. Can you get a gift from a relative?
0 votes Thank Flag Link Fri Nov 12, 2010
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