Seller says he will shoulder $10k of closing costs. The GFE from our lender shows "closing" cost of $12k,

Asked by Che, La Mirada, CA Wed May 14, 2008

but is inclusive of $4k of prepaid items for RET, PMI, Hazard insurance etc.,. My questions is will the $10k "rebate" also cover the prepaid items? or will I be loosing some of it (about $2k) since the "pure" closing cost is only $8k? I am confused and need help, please!

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Trey Bowden, , Edmond, OK
Wed May 14, 2008

Please carefully consult your purchase contract. In most cases realtors will stipulate language that includes prepaids in the seller concessions. At the same time if the contract simply stipulates $10k in closing costs without the language of prepaids, you won't be able to apply them in this way.

I'm stretching my brain to try and figure out why there would be $8k in pure closing costs. Either you are buying down the rate and paying the fees to offset the compensation the broker is losing in the rate pricing, or you are being overcharged, that is unless the loan amount is over $500k.

My suggestion is that you contact a friend you trust and ask them who they have used as a mortgage provider. Contact this individual and go over all your paperwork with them. It sounds to me like you might uncover some charges and fees you won't be comfortable with.

Good Luck!

Trey Bowden
Mortgage Provider
(405) 340-3277
1 vote
Brent Bester, , Columbus, OH
Wed May 14, 2008

12K for closing costs seems abnormally high to me. Are you buying the rate down? What is the loan amount? It sounds like you are working with a broker. Additionally, if you are doing an FHA loan you can get those most places for less in cost. To answer your question: whatever difference it does't cover you will have to as a consumer. The 10 k concessions can be used for prepaids as long as it is written in the contract. Some of your pre-paids may be asorbed by a tax credit you will recieve depending on when you close. But if your only getting concessions of 10K and prepaids and closing costs are 12K, you will have to make up the difference out of pocket. Finally, I would shop around for mortgages and loan officers. I would never pay 8K in closing costs on any purchase. So if it's not too late I would look around and a second opinion for sure. Hope this helps! Call me if you have futher questions.

Brent Bester
Mortgage Professional
1 vote
Charita King…, , Downey, CA
Sun May 18, 2008
If you had an agreement that only 10k to be paid by the sellers, that will only be the cost that he or she is required to pay. I believe the additional 2k is your pre-paid loan interest. Do you want to have the sellers pay for that? Discuss it with your agent and see what he/she can do about it. Remember that the cost that you are seeing from the good faith estimate is only an "estimate" it could more be more than 12k or less than 10k.
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