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1. You are approved for a straight FHA loan with a purchase price up to $250,000.00.
2. The approval is based on a "Gift" of $10,000.00 (or less if you save more by the time you go under contract - to be tweaked as we go)
3. It is also based on having the seller pay about $10,000.00 of your closing costs
Interest Rate 4.625 %
The document she sent has conditions say
"seller may contribute $15,000 towards the borrowers closing costs, but cannot exceed 6% of sale price".
If cash to close exceeds $10,854 loan must be underwritten
Lender to receive fully executed gift letter from an acceptable donor in the amount of $10,000 (WHA????? NO ONE IS GIVING US ANY MONEY???!!!)
I don't understand how much we have to save up to put down? I was expecting 3.5% our around $7k
Of course we were going to make the seller to pay closing costs part of the deal.
I'm more confused than ever!
Last edited by *Cyndee*; June 8th, 2011 at 10:44 AM.
I really have no clue - mortages in the US confuse the crap out of me, it is so much easier here. But anyway, just reading that as a layman, I take that to me you need a $10K deposit saved up. I have no idea why they'd use the word "gift", but I''m assuming deposit since it says the gift amount decreases if you save more between now and then.
Very confusing for sure. I hope you get it all sorted. The exciting part is you do have the approval!!
I get that, saving a big chunk of money is soooo hard. You should get clarification that this what it means though. And if that's the case, is the $10K over and above a deposit or is the loan type you have not require a deposit now?
Money **** is always so freaking stressful and it doesn't help when you get confusing information. It's like 1 step forward, 3 steps back kinda deal.
My FIL called and explained it to me and I'm feeling much better. Basically we'd need 10k full for 250k loan, or basically 3% of whatever amount we go for which is what I expected.
It's the realtors job to negotatie a sale on a house we like within the terms of the loan approval - so getting the buyer to come down at least 5k on price and pay closing costs will write it into the deal as 10k assist basically.
The reason the term gift is used is because FHA loans allow gifted money up to a certain amount. Conventional loans require that you prove the money in your bank account is yours (usually large deposits must sit in your account for a certain period of time so that it looks like the money came from you instead of a friend/relative).