I am in the process of negotiating for a house right now. The 4 bedroom house costs $218,000 (St. Louis, MO). The seller has agreed to give me $8000 credit to pay for repair for the house.
My mortgage broker told me that the lender will no longer give me $218,000 loan but instead will give me a $210,000 loan because of the credit.
He said to get around this, I should write in the contract that the seller will pay the $8000 credit towards the CLOSING COST. Then the mortgage broker will write me a check for $8,000.
This way I can get the loan for the full $218,000. Is this true???
I am a mortgage consultant, and it certainly sounds off that your mortgage broker wants to write you a check for $8000. The easiest way to get that $8000 is to do it as a seller consession, most lenders allow 3-6% towards closing costs. If you do it as a credit for repair of the property that will raise questions with the lender about the condition and marketability of their collateral. An added benefit of putting it towards closing costs it that it will reduce the amount of money that you will need to bring to closing, and you can use that savings at the closing table to make the repairs.
Molarband, be leery of mortgage folks like this! If you want, lay out your scenario. I'll give you free advice of what's the best step to take "if I were you." I've signed 14 loan documents myself on real estate. I understand what it's like to go through this.
I'm part of another mortgage blog on the net, and a lot of people have been helped with my advice.
So, if you still needing help in structuring this deal, lay out your FICO's, deal, etc. then I can direct you to what's the best option.
It is really hard to say whether or not your broker is yanking your chain. Jeff who posted to this thread earlier is part of the mortgage broker forum that I participate in and he is very knowledgeable. The problem is that there are many factors that could be causing this situation to come about. For instance the loan program you are using may have very specific rules about seller concessions.
Or, since this is for repair work, the money may be going into a repair escrow, which some lenders just don't like to do. Your broker may be offering you a legitimate work-around. Without knowing all of the nitty-gritty details, it is really difficult to say whether or not this is legit...
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