Posts

“1% Closing Cost Credit Referral” How’s It Work? Compliant? No Free Lunch

One of America’s largest mortgage banks is offering a “1% closing cost credit referral” to real estate agents. The below paragraph was copied directly from an email that the lender sent to an agent we know: “I’ve attached your exclusive 1% closing cost credit referral. In order to reserve that for your new buyers you […]Read More

Illegal In-Law Units and Credits For Closing Costs Always OK If…

We blogged yesterday about “Clean Contracts” and received a couple of great questions. Illegal in-law units and/or kitchens:  Appraisers cannot attribute value to illegal units in most cases, unless they are typical for the area and there are comparable sales with similar units to support the value. Also, stoves from non-permitted kitchen areas must be […]Read More

Closing Cost Credits for NRCC, RCCs – Taxes, Transfer Tax, Insurance

This is a reminder that Lenders, Sellers and Realtors can credit commissions or proceeds for closing costs. Closing Cost Credits can cover both non-recurring and recurring closing costs, including transfer taxes, hazard insurance, property taxes, HOA dues, interest and impound accounts. Substantial recurring closing costs often make allowable credits much larger than people realize, especially […]Read More

Closing Cost Credits Too Large? What To Watch For & Do?

Yesterday, we mentioned that closing cost credits can equal 6% (or even 9%) of the purchase price. Hence, for a $500,000 purchase, it is completely acceptable to have the seller credit $30,000 for closing costs, from a lender’s perspective. Issues arise when closing cost credits exceed actual closing costs. This often happens when there are […]Read More

Closing Cost Credits Never Too Big – “Fake Points”

We have a $500,000 FHA Purchase with a 3% Seller Credit for Closing Costs. The borrower wants a “No Points” loan, so the Realtor was rightfully concerned that the closing cost credit is too large. The credit is technically too large b/c the total closing costs (recurring and non-recurring) will be less than $10,000 b/c […]Read More