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What Are Closing Costs For Homebuyers?

“Closing costs” is an all encapsulating term that many homebuyers will hear often once their offer has been accepted. Closing costs consist of all the additional costs that homebuyers have to pay as they prepare to close on their home. The typical estimate mortgage lenders provide for closing costs is between 3% and 5% of […]Read More

The “No Out of Pocket” Scam; Worst Advice Ever!

Borrowers often send us refinance proposals from other lenders to review so we can either beat the proposal or give our blessing. One of the things that always scares us the most is this phrase: “there will be no out of pocket costs…” This often means the loan officer is charging outrageous fees and just […]Read More

Four Steps to Prepare for Closing Day in Austin, Texas

Closing day is the last step for Austin homebuyers in their loan process. All their paperwork gets finalized and the deed of the Austin property is officially transferred to the new owner. Here are four steps to help Texas homebuyers have an easy closing day! 1. Start saving! One of the best ways Austin homebuyers […]Read More

JVM Has A Down Payment Assistance Program; When Down Payment Assistance Programs Are Overrated

JVM offers the Chenoa Down Payment Assistance Program (DPAP). The “assistance” is a 3.5% (of purchase price) 2nd mortgage that can be coupled with either a 96.5% loan-to-value FHA loan or a 97% loan-to-value conforming loan. Hence, qualified borrowers can purchase a home with no down payment. The 3.5% 2nd mortgage is at a rate […]Read More

Average Closing Costs for Homebuyers in Texas

Defining Closing Costs for Texas Homebuyers Generally, when a lender refers to “closing costs” they are referencing the fees required as a result of a property transaction. Closing costs can be broken down into two basic categories: Lender Origination Fees and Third-Party Fees. Lender Origination Fees Lender Origination fees might include the following: Processing Fee […]Read More

Five Misleading Closing Cost Tricks the Big Banks Play

We have been stealing a lot of loans lately from the big banks b/c our service is better and our rates are lower. As a result, the big banks are using some very aggressive and often misleading tactics to win borrowers back. These tactics include massively understating closing costs and then implying that their closing […]Read More

What Borrowers Need to Know about Escrow and Prepaid Items

Many borrowers are confused when it comes to prepaid items and escrow accounts and what role they play when it comes time to figuring out closing costs. Here is a breakdown of all the information borrowers need to know. Escrow Accounts Defined Escrow Companies act as at third party buffer between buyers and sellers. Escrow […]Read More

Who Can Pay Closing Costs? Seller, Lender, Realtors; Happy Veterans Day

JVM Lending will be working a half day today because of the Veterans Day Holiday. We will, however, have a Mortgage Analyst “on call” all day and all weekend, per our usual practice. We frequently have transactions with closing costs as high as $20,000 with title, escrow, appraisal, underwriting fees, impounds, transfer tax, sewer lateral, […]Read More

What Ever Happened to APR? Annual Percentage Rate

Best quote of the day from the WSJ (Jason Gay): “Watching the Cleveland Browns is like watching a golden retriever make Thanksgiving dinner. Enthusiastic, yes, but not very successful.” I loved that b/c we work with all too many golden retrievers :). Every lender is required to quote an Annual Percentage Rate, or APR. APRs […]Read More

Consult Lender Before Moving Money; Paper-Trailing Assets

We recently had a Realtor remind his client to talk to us before moving any money around, and it was a very pleasant surprise. Most Realtors and borrowers do not realize how stringent lenders have to be when paper-trailing all assets used for reserves, down payment funds, and closing costs. Today’s blog is a quick […]Read More

Buyers Can’t “Roll Closing Costs” Into Their Loan; Options?

Total closing costs for a purchase transaction can vary from $5,000 to $30,000, depending on purchase price, loan amount, type of loan, month of the transaction and location of the transaction. This is b/c closing costs include not only the standard title, escrow, appraisal, underwriting fees, etc.; closing costs also include prepaid interest and property […]Read More

Lender Credits for Closing Costs; Save Deals For Cash-Tight Buyers

When we have buyers who are very tight on cash, we usually recommend a lender credit for closing costs. This is especially the case in competitive markets where seller-credits are non-existent. B/c non-recurring and recurring closing costs can exceed $10,000 or $15,000, lender credits can often save deals for cash-starved borrowers. Buyers need to understand, […]Read More

Misleading Closing Costs Quotes, and Inaccurate Scenarios

JVM spends a substantial amount of time educating buyers, and this process includes multiple “Payment and Closing Cost” Scenarios. We go out of our way to make sure we include every possible cost in our estimates to ensure there are no surprises at closing time. Our estimates include Transfer Taxes, Property Taxes, Interest and Hazard […]Read More

Funds To Close; Every Dollar Accounted For; Don’t Move Funds!

One of our biggest hold-ups at closing is accounting for every dollar used for down payment and closing costs (funds to close). Lenders are now required to paper-trail every dollar used. This means every large deposit has to be “sourced” and every check to escrow has to come from a verified account (both withdrawals and […]Read More

Can’t Use Business Funds For Down Payment w/o CPA Letter

This is a reminder that lenders do not allow borrowers to use business funds (from any “business account”) towards a down payment or closing costs, unless borrowers can get a letter from their CPA that states the withdrawal will not adversely impact the business. CPAs, however, rarely provide such letters now days b/c of the […]Read More

Lender Credits For Closing Costs Again – Effect on Payment?

Yesterday, we recommended Lender Credits for closing costs for borrowers who are tight on cash. We pointed out how such credits result in higher rates, but we failed to mention the effect on a mortgage payment. Our borrower yesterday had a loan of approximately $400,000. If she locked in a rate of 3.75%, with a […]Read More

Using Lender Credits For Closing Costs; Just Need Down Payment

We had a borrower come to us over the weekend who wanted to buy a $400,000 home with FHA financing, and she had exactly $14,000 for a down payment (just enough). She had no money for closing costs which will be about $10,000 for non-recurring and recurring costs (including impounds). The solution in this competitive […]Read More

Realtor Commissions: Credited for Closing Costs/Gift for Down Payment

Most people know that Realtor commissions can be credited for any and all closing costs. The costs include all nonrecurring fees (title, escrow, appraisal, etc.), and recurring costs such as interest, property taxes and even transfer taxes. Realtors can also apply their commissions to a buyer’s down payment if the Realtor formally “gifts” the funds […]Read More

Closing Cost Credits for Impounds and Transfer Taxes Too

We frequently remind Realtors that credits for closing costs can be for both recurring and non-recurring closing costs. Credits should always just be for “closing costs” without delineating “recurring” and “non-recurring” costs. Recurring costs = Interest, Property Taxes, Insurance, HOA Dues; Non-recurring costs include all one-time fees such as escrow, title insurance, appraisal, notary, underwriting, […]Read More

Almost Anybody Can Be a Relative for “Gifting” Purposes

We repeat this often b/c such a large proportion of our borrowers purchase properties with “gift funds” for down payments and closing costs. A “donor” or a person gifting funds can be almost anybody, including an aunt, an uncle, a sibling, a parent, or a grandparent. Lenders do not verify the authenticity of the relationship. […]Read More

What To Do If Seller Closing Costs Are Too High

We recently received a purchase contract with a $600,000 price, and $26,000 in seller-credits. The issue? The $26,000 seller credit exceeds our $19,000 estimate of closing costs (closing costs are “high” b/c they include impounds and Oakland transfer taxes). The credit is $7,000 too large. Note: Seller Credits can be used towards any closing costs […]Read More

Unlimited Rate, Payment, Closing Cost Scenarios = Our Job

We had borrowers leave their loan officer and come to us (they found us on YELP) a few months ago because their loan officer was too busy to provide them with payment and closing cost scenarios. As they shopped for properties, their needs, qualifications and price ranges were changing, and as a result, they needed […]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 Can = 6%; 2% for Investors; Commissions Too

Sellers can credit up to 6% of the sales price, in most cases, as a credit for ALL closing costs – including non-recurring and recurring fees. This includes transfer taxes. Closing cost credits should just be for “closing costs” and not for “non-recurring costs” only. Many people think closing cost credits cannot exceed 3%, but […]Read More

Using Higher Rate To Pay for Closing Costs; Lender Credits

Many homebuyers are tight on cash and barely able to come up with down payment funds. We often offer such buyers lender-credits for closing costs. Closing costs for a “no points” loan (both recurring and non-recurring) can vary from $7,000 to $15,000. Closing costs, of course, depend on the purchase price, loan amount, the time […]Read More

Why Seller Credits Cannot Be Used For Repairs; How To Do Repairs

It is well-known that seller credits on a purchase contract can only be used for closing costs (and not for repairs), usually up to 6% of the purchase price. What is not always understood is the reasoning behind this rule. Lenders won’t allow credits for repairs for the following reasons: (1) A repair issue referenced […]Read More

“Reserves;” What Are They? When Are They Necessary?

“Reserves” include the liquid funds available to a borrower after a transaction closes. In other words, reserves are funds left over after all down payment and closing cost funds are paid into escrow. For FHA buyers and conventional buyers of single-unit, owner-occupied properties, reserve-requirements are rarely an issue. Most owner occupied loans require little to […]Read More

Seller Credits For Closing Costs – OK, But Not After We Go to Docs

Sellers are allowed to “credit” for closing costs in amounts up to 6% of the purchase price for owner-occupied properties, and up to 2% for non-owner occupied properties. Realtors often astutely negotiate closing cost credits in lieu of “repair credits” after a contract is a ratified, inspections are done and repair needs are illuminated. If […]Read More

Realtor’s Under-Estimated Closing Costs

We sometimes have buyers come to us with closing cost estimates from their Realtor that are much too low. While we are frequently able to incorporate a lender credit by increasing the rate for our clients, it is nonetheless disheartening to learn that their prior estimate of closing costs was greatly underestimated. Below is our […]Read More

Realtors Can Credit Commissions for Closing Costs

Cash-tight buyers can get credits for closing costs from three sources: (1) from the seller; (2) from the lender; and (3) from Realtors commissions. Many people are unaware that Realtors can credit commissions. It is sometimes necessary in this market in which sellers are often unwilling to credit closing costs, and lenders are unable to […]Read More

Contract Adjustments – Price Increase Not OK; Decrease OK; Repairs?

We are often asked about purchase contract changes after our borrowers are in contract and after the appraisal is done. This is especially the case after inspections are done and unexpectedly large repair-needs surface. A price reduction is always OK. Lenders and appraisers will have no issues. We just had a transaction where the buyers […]Read More

Defining “Closing Costs” For Credits and “No Cost” Loans

Borrowers often come to us with quotes for a “no cost” loan from another lender. Upon further examination, it sometimes turns out that the quotes were only for “no points” and “no lender feeds;” the loans were not “no cost” at all. Defining “closing costs” is very important b/c there are so many layers of […]Read More

Using Lender Credits Instead of Seller Credits to Pay Closing Costs

We frequently have buyers who are tight on cash and unable to get seller credits for closing costs b/c the market is so competitive that sellers refuse to provide them. If there is no other source for cash, one solution is to have us (the lender) inflate the interest rate somewhat in order to provide […]Read More

Seller Closing Cost Credit Can Be 6% – Explained

Seller Credits for Closing Costs can equal 6% of the sales price, irrespective of the sales price. Hence, a $700,000 purchase could have a $42,000 seller credit for closing costs. Problems arise, however, when closing costs do NOT total $42,000. If closing costs only total $22,000, for example, the buyer simply loses the unused $20,000; […]Read More

Closing Cost Credits – Revisited

Credits for Closing Costs on a purchase contract should just be for “Closing Costs”, and not for only “Non-recurring Closing Costs.” Very few lenders restrict-seller credits to only “Non-recurring Costs” these days. There is no reason to restrict credits to only non-recurring costs; it just requires the buyer to bring in more money. In addition, […]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

Seller Credits for Closing Costs

Remember that at most lenders, we can use Seller Credits for Nonrecurring and Recurring Closing Costs (this includes Impound Accounts). Closing Cost Credits can be up to 9% of the purchase price if the LTV is 75% or less (for conventional loans). FHA still allows 6% seller credits, even if the LTV is 96.5%. Investment […]Read More

Wells Fargo Will No Longer Allow Upward Price Re-Negotiations

Wells Fargo has grown “suspicious” of contract renegotiations that result in price increases, and other lenders are expected to follow suit. The price increases invariably occur after an appraisal comes in higher than expected and they invariably result in increased seller-concessions. As a result, Wells will no longer allow upward renegotiations after January 25th. There […]Read More

Turn Times

There is little economic news today, as bank stocks continue to get hammered in the market, and interest rates remain about the same. We keep getting asked by Realtors if 30 days is enough time to close escrow. It is more than enough time. We can close as fast a 14 days if necessary. The […]Read More