I closed on a property a couple days ago... It was supposed to be a good day, but turned out to be quite frustrating, and a bit more expensive than it was supposed to be.
I was working with a lender who promised to cover all closing costs. I had options on rates, each of which had different associated lender credits and we agreed on the rate that resulted in 0 out of pocket costs. After we had a ratified contract on a property, on April 7th we signed all the loan documents including a rate lock agreement that showed $0 in discount points and associated costs. It had an expiration date of May 25th. Other documents from the broker showed $0 in out of pocket closing costs. Fast forward, 4 days before closing I receive the Closing Disclosure document that shows no lender credits and me paying over 7k in closing costs, in addition to the down payment. I immediately email the broker who tells me don't worry, that's not the final one, you definitely have lender credits.
Two hours before closing, after confirming the amount my cashier check needs to be at closing, the broker tells me that the costs of a rate extension on April 17th (news to me at this point) ending up costing all the lender credits and I had to either pay the additional 7k or increase the rate. This makes no sense to me as the rate lock agreement wasn't supposed to expire until May 25th. After hours on the phone trying to figure out what's going on and fix it, I reluctantly close and pay the money. If I didn't I would likely loose almost as much in earnest money anyways and lose the investment property.
Do I have any recourse? Please don't just say "you'd have to consult a lawyer." I know that would be what I would have to do if I pursue that route and there are many other documents, etc. involved, but I'm just looking for anyone who's encountered anything similar. Thanks.
I think you just need a new lender. This has all sorts of red flags on it for me. First off is the zero closing costs. What was the rate difference between closing costs and not? There’s always some closing costs typically. Unless your rate difference was a lo
Second is this conventional or commercial financing? For conventional that 7k seems high. What was your earnest money amount? You didn’t have a financing contingency in your agreement?
At this point I suspect you have little recourse since you closed and lost your leverage. Besides the whole lawyer thing which I wouldn’t recommend anyways
Sounds shaky/bait and switch to me. But, you will Always have some "closing costs"...prepaid taxes, insurance, possible tax prorations, etc.
Let me clarify, by no closing costs I mean they would be credited by the lender, resulting in no closing costs for me. This isn't uncommon for a conventional loan with a 20%+ down payment; my last two purchases included no closing costs without rolling any in. As far as the financing contingency, that wouldn't have worked for me as how it was written, I would have to have been denied financing, which I wasn't.
I knew I was loosing my leverage by closing, but with the risk of losing 5k earnest money anyways and the possiblity of losing the property, I did.