Financing in Gaithersburg>Question Details

Dimo, Both Buyer and Seller in 20814

Short Sale Question-Third party lender (Saxon Mortgage) won't accept offers that contain closing help. Options

Asked by Dimo, 20814 Thu Feb 26, 2009

Had put an offer on a sf TH for 230K concessions/closing help. Saxon came back saying they do not accept offers with closing help in them. Any ideas what my options could be here? Should I reduce the net offer to Saxon (with no closing help), and roll closing costs into the mortgage? Any companies or individuals with experience with these types of scenarios? Thanks in advance.

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A FHA 203(k) mortgage will finace 110% of the appraised value with repairs. When you quote closing help, what did you ask for? Seller to pay some closing costs? If that is what it is...you may some options. Right now 203(k) loans are higher in interest rates, which means although your getting the help you need to repair the property...you are also paying more in interest for that loan. Most borrowers who obtain a 203k loan refinance (streamline) immediately after the final disbursement of funds so they can have a lower rate. With this in mind, I suggest you consider raising the interest rate a little more to cover what ever costs is needed to cover the loan if cash to close is an issue. Let me know if this works for you! Have a great day!
0 votes Thank Flag Link Thu Feb 26, 2009
Dimo - Getting a short sale through can be a real pain. You would think the banks would be motivated to get these closed, but they rarely are.

Definitely negotiate a lower price. If it doesn't work out, find another. Gaithersburg has a ton of distress sales (I'm assuming the property is in Gaithersburg based on your question) -- check out http://mocorealestate.com/foreclosures/

Talk to your mortgage guy about options to finance closing costs. This actually may be tough to do since underwriting would still look for a set loan-to-value percentage.

Good luck.
Web Reference: http://mocorealestate.com/
1 vote Thank Flag Link Thu Feb 26, 2009
Actually, you can roll closing costs into the loan with raising the interest rate....it's called Lender Paid closing costs. These are typically paid by the Lender out of the money they recieve from your interest rate...called a yield spread. Also some costs associated with a 203k loan are financed into the loan, these fees are shown on the 203k worksheet. I wish you the best.
0 votes Thank Flag Link Thu Feb 26, 2009
Hi Dimo
These folks are right. Short sales are tough and a lot of times banks won't work with you to come up with a creative option. I would lower the offer. Please note though, that mortgage guidelines dont permit you to roll closing costs into the mortgage on a purchase

Best of luck
0 votes Thank Flag Link Thu Feb 26, 2009
It should be noted that comps in the area come in at 200K, if property was in good condition (which it is NOT). The concessions would cover closing and repairs to dangerous wiring and broken windows/appliances...
0 votes Thank Flag Link Thu Feb 26, 2009
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