Question Details

Andy, Home Buyer in Milwaukee County, WI

what are prepayables?

Asked by Andy, Milwaukee County, WI Mon Apr 6, 2009

Hello
I am looking to buy and i was told that i can get seller to buy a point. I can get the seller to pay closing costs. But was also told - dont just say closing cost (in case you get a good deal and the costs are low) - call it prepayables of 5K (as an example) - which means you can use the money to do other stuff at closing (buying new appliances). Is that even legal?

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Here we do it a couple of ways, one is a buy down and the other is the seller to pay closing cost/repairs. Its going to come off your bottom line. Your HUD statement that you get at closing is going to have a sellers side and a buyers side with all the charges and credits applied accordingly. So if your actually talking about a buy down, here for us that would mean that we're able to get a better interest rate. More than likely the seller is going to make some cash anyway...so his bottom line will reflect that buy down as a charge and your side should reflect it as a credit. Meaning you could possibly bring less to the table. It depends on what they are actually doing or which way your going to pursue it. My advice would be to discuss this with your lender and your agent should actually be explaining to you in detail whats going on or where thats going to put you!
1 vote Thank Flag Link Tue Apr 7, 2009
If I understand your statement correctly...I can't speak for WI but I can tell you it isn't in TX!!! If there is a loan involved the lender will not let you walk away from the table with money! Not going to happen. The seller can allow a certain amount to go towards repairs and improvements but you would need to have reciepts at closing if you could find anyone who would wait to be paid for it. Otherwise, that dollar amount is going to apply to the purchase price or closing cost which means you could would bring less money to the table. That is legal. It is a little more detailed than that here which I won't go into because your not in Texas and I don't want to confuse you. I would be checking into it, that's for sure!!
Web Reference: http://www.angelakhill.com
1 vote Thank Flag Link Mon Apr 6, 2009
I guess i dont expect to walk away with cash - but do i then have to bring less for the down payment? if the seller is buying a point - who is actually paying the mortgage company/lender the $ for the point - is the seller reducing the price of the house by that much? (which doesnt affect my downpayment too much)
if 1 point is worth say 5K - who is giving the lender that money? I know I am not - is the seller providing a check?
0 votes Thank Flag Link Mon Apr 6, 2009
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