2 Loans equal double clos. costs?? - Posted by IB (NJ)

Posted by IB (NJ) on January 31, 2002 at 10:48:29:

that it was negotiated that I would cover the closing costs.

Thanks for the reply.

2 Loans equal double clos. costs?? - Posted by IB (NJ)

Posted by IB (NJ) on January 31, 2002 at 09:23:11:

I have a buyer who was supposed to be approved for a 90% mortgage. But his commitment came back at 89%. I talked to the mortgage broker about the importance of the mortgage reflecting 90% instead of me taking a $1400 short at closing (the remaining 1%). The broker came back and stated that the mortgage will be in 2 loans, one for 80% and the other for 10%. Anyone know the reason for this? And more importantly, will the fact that the 90% being broken into two loans result in additional closing costs?

Re: 2 loans - Posted by Pam WA

Posted by Pam WA on January 31, 2002 at 13:31:56:

I recently bought a HUD repo with two loans. Here were my problems (may not affect you as the seller).

The fees for the second, which was a home equity loan, were a total of $35.00 for Flood certification, recording, and servicer’s fee. Theis loan was from the same company as the first, so they already had credit report, appraisal, etc.

They would not give a home equity loan for less than $10,000, so I ended up with a $40k first and a $10k second. THEN when I refinanced the home equity loan to pull out $10k additional to do improvements on the home, I had to go through a different company (as I was over 80% of appraised value on a manufactured home) and I ended up with a $20k home equity at 9.75% interest! Fees for this were about $450.

I would try hard to find different financing on something like this in the future, however since it was a HUD repo, time was limited, the Feds wanted to know the lender up front, and I probably didn’t push as hard as I could have to find a better loan. The mortgage broker I was working with is really a nice guy but he fell down on this one.

Hope this helps. May or may not apply to your situation.
Pam WA

Re: 2 Loans equal double clos. costs?? - Posted by Brent_IL

Posted by Brent_IL on January 31, 2002 at 10:29:06:

The broker is using an LTV of 80% to get good terms on the first with no PMI. The 10% second will have higher costs because it’s a junior loan. The total loan costs to your buyer may, or may not be higher than those associated with getting a 90% LTV loan.

These are costs to the buyer.