Home Buying in Easton>Question Details

Jaime, Home Buyer in Hamburg, PA

is legal a company give you closing costs and i have to use the company bank? other wise no closing costs

Asked by Jaime, Hamburg, PA Mon May 9, 2011

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Most people think there is something shady about offering closing costs but it's actually a great way for you to save some out of pocket money, and it's legal with federal regulations, in both FHA and conventional financing. As a general rule 3% is allowed to be paid by the Seller, and is disclosed on your HUD closing statement, but FHA will allow upwards of 6% but these must be closing costs and not related to 'under the table' checks.

The seller provides you the closing cost credit. If the 'company' is the seller than you have to do as they say. But it's a buyer's market. So negotiate. Maybe get a free stainless microwave thrown in...
1 vote Thank Flag Link Mon May 9, 2011
It is probably legal for them to offer the incentive of providing closing costs IF you use their lender. If you choose not to use their lender, then they reserve the right to not pay your closing costs.

You have a choice to use their lender or not. They have the choice as to whether or not they will pay your closing costs.
1 vote Thank Flag Link Mon May 9, 2011
Hello Jaime! Yep Barbra is right! It is legal for a Builder to offer this type of incentive. Basically, they do it because they get the money back in providing the other services to you. But, I have found that most of them give you the best deal in the way of interest rate and everything has always ran smooth for my client's when they took the deal. The other Mortgage companies where not able to compete or give them a better deal. It seems like they are forcing you to do something you don't want to do ....but, it usually ends up to be the best deal for you in the end.
0 votes Thank Flag Link Tue May 10, 2011
Hi Jaime
You are free to choose any lender you desire. Builders often have preferred lenders & it may seem like you have to use them, but you don't. They just won't pay your closing costs if you do not borrow from them. Banks often have language in their contract addendums that they will pay your title insurance if you use their title company, but again, Pa is a right to choose state and they cannot force you to use their title company, they just won't pay your insurance. Hope this helped.
0 votes Thank Flag Link Mon May 9, 2011
I think I may have mis-understood your question. Are you talking about the agent giving telling you what your estimated closing cost are, or are you talking about the seller paying your closing cost
0 votes Thank Flag Link Mon May 9, 2011
In Alabama it is required that the real estate licensee give you estimated closing cost whenever you write an offer. It doesn't matter who you finance with. I don't know the real estate law in PA.
0 votes Thank Flag Link Mon May 9, 2011
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