Home Buying in Houston>Question Details

moonbituinazn, Home Buyer in Austin, TX

My LO is asking me to show proof of funds for closing that I don't have. How does that work if seller agreed to pay 6% closing costs?

Asked by moonbituinazn, Austin, TX Mon Sep 23, 2013

I was not informed that I will need to show proof of funds for closing. My closing costs total up to $7000. There is no way I can come up with that amount before my closing date at the end of Oct. Does that mean my loan will not be approved?

Help the community by answering this question:


The LO might have meant proof of funds for down payment?
Seller cannot pay that.
Do you have the down payment monies?

Tom Burris
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0 votes Thank Flag Link Tue Sep 24, 2013
To add: You do not have to show proof of funds for the amounts paid by the seller. Seller paid reduce YOUR closing costs and you only have to pay what the seller didn't cover. And you only need to show proof of funds for that amount.
Flag Tue Sep 24, 2013
Well that is quite the pickle. Yes, more than likely you will need to show this proof of funds or you will have a hold up for closing... or... you may not get the loan at all.

This is a discussion to have with your loan officer and or attorney.
0 votes Thank Flag Link Tue Sep 24, 2013
Go see your loan officer face-to-face, review the numbers. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Tue Sep 24, 2013
It sounds as if your loan is going through the underwriting process. In underwriting, you are asked to provide very specific and detailed information about your finances which help to prove that you have the necessary funds to purchase the home. You will need to contact your Loan Officer right away and discuss what you have asked here. If you are not comfortable calling/emailing the Loan Officer, call,or email your Realtor ASAP!

Good Luck,
Sharon Smith
Keller Williams Realty
0 votes Thank Flag Link Tue Sep 24, 2013
The fact you are posting here instead of speaking to your LO tells me they are not communicating with you very well. 6% should more than cover your closing costs. However, the seller contribution to closing costs are in paragraph 12(1)b and it is a dollar amount. You should confirm it covers all your closing costs.
Web Reference: http://www.DaveRealty.com
0 votes Thank Flag Link Tue Sep 24, 2013
You loan officer should be guiding you along with your buyer broker. You should not have applied for a mortgage never mind made an offer unless you could account for every penny needed to for down payment and closing costs. You should have received a GFE which is a good faith estimate when you applied for the loan. It is LAW and and required. That would be your closing costs. Then deduct the amount of closing costs the seller is crediting. you, that is how much you will need. Go to see your loan officer and demand they go over this with you and bring your buyer broker.. Good luck
0 votes Thank Flag Link Tue Sep 24, 2013
Probably does mean that plus most loans would require 2 months of reserves to pay the Mortgage. Your LO should have informed you of this.
0 votes Thank Flag Link Tue Sep 24, 2013
Closing costs include the down payment, which you apparently don't have. If you're within the time frame stated in the Third Party Financing Addendum, you'll likely be able to recover your earnest money and terminate the contract ... but you're correct in assuming that your loan will be denied. Somewhere during the process, the lines of communication broke down. Where the responsibility lies is a moot point ... you're here now. You might want to investigate converting the loan to FHA ... not being familiar with the terms of the sale, it's just a thought. I wish you well.
0 votes Thank Flag Link Tue Sep 24, 2013
6% should cover most of your costs needed to close, but it does not cover your down payment. Is that what they're asking for you to pay for?
0 votes Thank Flag Link Mon Sep 23, 2013
If you have funds somewhere in a 401K or some other form of savings, you can use that as reserves. If you have 5% DPA and seller is paying some of closing costs, the numbers will probably change at closing. All the answers are good advice.
Flag Tue Sep 24, 2013
I will be receiving 5% down payment assistance through a first time home buyers program so as far as I know that is covered.
Flag Tue Sep 24, 2013
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