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???
What difference does it make. They are giving you 100% loan. Is it a good rate and terms? I have gotten several loans with repair allowances and it is done often. Perhaps this lender is different. With a repair allowance they may make you escrow the repair money until the repairs are complete like my lender does. With the money being a credit toward closing costs you will not have to have the lender approve the repairs. Sounds like a sweeter deal for you.
it may be a good deal for you. are you getting a good truly below market price??? or are you paying what its worth?? if it’s worth $210,000 and you try to include the $8,000 concession, you would have to find an unethical appraiser to make the deal work. also, if it’s listed at $210,000 and it sells for $218,000 that has to go into the appraisal report. not that difficult to do.
if market value is $210,000 and you pay $218,000, keep in mind that if you have to sell tomorrow you’ll need to get about $235,000 just to break even after selling commissions, escrow and title costs of approx. 7%.