Home Buying in Shirley>Question Details

Jenn V, Home Buyer in Shirley, NY

With FHA are Sellers Concessions actually rolled into the mortgage and am I paying the 6% closing over 30 yrs

Asked by Jenn V, Shirley, NY Sun Nov 9, 2008

Seller just accepted our offer of $280, RE agent called Mortgage Banker (who pre-qualified us) & was told to figure $17,000 in Seller's Concession to cover closing- am I paying that $17,000 in my mortgage? My 3% down payment has increased to take that $17,000 into consideration. A little nervous (and will have an answer on Tuesday) b/c Banker orginally gave us $273-275 range for comfortable payments, is it possible we won't qualify now if the mortgage is $297,000 minus 3% downpayment? Please help!

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Jenn here again, just wanted to clarify that this is a situation where dual agency applies, the advice we received after attending an open house (without having worked with another agent,) was that in NY our attorney (required in NY,) would be looking after our interests and it wasn't neccessary to have our own agent. While we do have a signed offer I have nothing in writing from the Mortgage Banker and thought $17,000 was a pretty high amount myself. All of this occurred late Friday & the Mortgage person was not available this weekend for further questions. We will be meeting w/our RE Lawyer this week and are supposed to meet with the mortgage person after that, schedule the inspection and so-on. A recent appraisal of the property exceeded $300,000 so hopefully if the mortgage is for $288,000 (after down payment) we should still be ok w/the mortgage being less than appraisal but I want to ask the right questions and be more informed for everything that will happen this week. Thanks for all the assistance-
0 votes Thank Flag Link Sun Nov 9, 2008
Hi Jenn,
With seller concessions it is the seller that is paying for the things that you listed that the concessions would cover i.e. closing costs. If you are buying the home for 280K plus 17K concessions the seller gets 280K for the house and gifts the 17K to your mortgage as per your agreement. You are purchasing the house for 297K and your mortgage is 297K over 30 years where if you had no concessions you would have mortgaged 280K over 30 years.

Were the concessions something you had to have from the seller so that you could get the mortgage or were you able to get the loan without the concession help? I run into a lot of people in MI that just don't have the up front money for buyer closing cost and have to ask for concessions. Dealing with this a lot I would also need to ask you if you think that the home will appraise for the purchase price with the concessions added on top of that, 297K? If not you could get half way to closing the deal and find out that the lender won't give you a loan because the home isn't worth that much.
0 votes Thank Flag Link Sun Nov 9, 2008
Hi Jenn, It sounds like the Mortgage company is rolling in the 3% down payment and closing costs ($17k sounds like an awful lot of $$ for just closing costs). Which would mean that no money would come out of pocket-basically 100% financing. When you say RE agent, is it your buyer agent? Did you ask for any seller concessions toward closing costs in your $280k offer? Have you search other mortgage companies? Just because this company is the one that pre-qualified you, doesn't mean that you have to use them for the loan. I would explore other companies to see what they have to offer.
0 votes Thank Flag Link Sun Nov 9, 2008
Jenn... you need to be talking to your lender and your agent. If you negotiated a 3% concession from the seller to cover closing costs, then it is in your contract and that is the seller's contribution to your closing costs. You'd pay anything above that. If you didn't negotiate it, then NO the seller is not going to pay your closing costs... they are paying their own. If you don't have the cash, then yes this deal could fall apart... you may not be able to wrap this into your loan.

If that actually happens, then you should seriously consider working with another lender/agent team who will make sure your interests are protected and you understand everything that's going on. I know it is hard because you're getting caught up in the excitement of buying your first home, but you simply must understand EVERYTHING. This is the largest financial investment of your life. You're likely financing for 30 years.... so you'll likely be living with this decision for a very long time. Understand it.
0 votes Thank Flag Link Sun Nov 9, 2008
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