BiggerPockets

So, i had an offer accepted to purchase a house for 380K + 5K closing costs paid for. After inspection, we found out the house needed a new roof. The agent agreed to refund 5k to us at closing for us to put towards a new roof. She said that she spoke to lender and they said that this is a new world and that they can't have so many credits back (5K towards close and 5K towards roof). So the agent agreed to cut home price down 5K to 375K plus they pay the 5K in closing costs. Thing is we would rather have the 5K in hand so i can put towards a new roof instead of just a lower mortgage. Does this seem fishy at all? Any other ways around this? She said she can't write me a check, that it's against the law??

Have you spoken to the lender about this repair credit? You're agent's correct, that lenders have limits, but 3% of the purchase price would be more typically (as if there's really anything typical with lenders these days.) At $5K for closing and $5K for repairs, you're still under 3%. Ask your lender directly, rather than relying on what the agent is saying.

If this was a REO, this is exactly how they would handle it, though.

Scott's comments are correct. Any money changing hands that's not on that HUD-1 is loan fraud.

I would be very careful with that. When you do things that way, you are putting the interests of the seller before your own. Their incentive is to spend as little as possible, while yours is to have the best work done that you can afford. Roofs are easy to cut corners on because many times a building inspector won't even look at the nailing on the plywood, etc leaving you with the long term problems.