Skip to main content

Need advice on how to use broker rebate during closing

LONG POST! Sorry about the length, I just want to make the most financially sound decision here.

We are purchasing a new townhome with closing set for mid month. At the moment, the builder is giving us 30k in credits to be used with the lender for rate buydowns (permanent and temp) and closing costs. Additionally, we are also getting a separate 1% back from the broker. I just really need some advice on how to best utilize all of this.

My RE agent does state that any of the 1% that is not used will go to him after taxes, and he is willing to give the remainder back to us as cash as well (Aside: I don't know if this is standard practice or not, but it feels really generous and I'm feeling lucky to be represented by him... we didn't ask for any of it!).

Here are some details about the numbers with a conventional 30-yr fixed rate loan:

Purchase price: $711,000

Down (10%): $71,100

Loan amount: $639,900

Seller credit: $30,000

Broker credit: $7110

Fixed rate: 5.25%

P&I: $3,533

PMI: $143

HOA: $240/month

Insurance: $38/month

Taxes: $5,500 (annual)

Currently, the mortgage lender has our fixed rate at 5.25% (this is using 1.125 points). She said base rate with no points was 5.5%, but that we cant lower the rate below 5.25%, so it seems that the broker rebate cant go towards that.
On top of this, they have also used part of the seller credit towards a 2/1 temp rate buydown (says it cost $13,611).

As it currently stands, the 30k seller credit is covering ALL closing costs, including the rate buydowns and basic pre-paids (1 month of HOA + transfer fees + working capital, 1 month of property taxes, 3 months of home insurance). The only thing we would need to bring to closing is the rest of our down payment (already put in earnest money).

But this leaves all of the broker rebate still on the table. One option my loan officer proposed is to buyout the PMI upfront ($6,655) and use the leftover to pre-pay two more months of HOA. Can anyone advise on any pitfalls for this? Would it be a good idea to not have that PMI for the next 8 years? But if our townhome appreciates by 7% in 2-3 years, we can ask for PMI to be removed as we would hit 0.79 in LTV. (PMI for 2 year (minimum): $3,432 and for 3 year: $5,148)

Are there any other options available from those who know more? I have tried to do research into this, but all I can find is sometimes people pay a year of HOA (in this case only uses $2,880) or more of the property tax?

Another option I can think about is to let the 1% go back to my agent, have the taxes taken on it and then use the rest to pay a lump sum directly into the principal.

Any help is appreciated! Thank you!!

submitted by /u/BrownCow_20
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/192881v/need_advice_on_how_to_use_broker_rebate_during/
Labels:

Comments

Post a Comment

Popular posts from this blog

North Carolina – “One to Buy; Two to Sell”

I realize I will likely have to contact a real estate attorney but also hoping to hear insights and experiences from others! I have a house in NC that I bought by myself in 2009, and paid off, in full, in 2022. I got married in 2023. My spouse and I have not lived in the house as our "marital residence". We have maintained separate residences even after we got married. (That a separate topic!). I am now selling this house. Realtors have told us that my husband has to sign the deed at time of transfer but I am not convinced since the house has not been our marital residence. The realtors like to use the phrase "one to buy; two to sell", which seems like a broad-stroke statement which is not applicable under all circumstances. And of course, the realtors don’t realize the details of my specific circumstances: I purchased and paid for the house in full prior to marriage Only my name is on the deed And most importantly, we have never lived in the house as a marit...
Post a Comment
Read more

Aren't comps/CMAs useless with buyer credits at close happening now?

I'm looking into buying a new construction townhouse in my HCOL US city. I'm seeing builders offering interest rate buydowns worth $20k-$60k on $800k homes (rather than just lowering prices) in order to keep their comps high for their other units, now that buyer demand has been declining. I asked my agent about these, and he said these buydowns aren't even the full story: buyers can write all kinds of other credits into an offer, like their closing costs, prepaid sewer fees, etc. Apparently cash buyers can just write in a "buyer credit at close" for any amount in their offer. So a new townhouse that appeared to sell for $800k in the MLS might have actually been a cash offer with a $100k+ buyer credit at close, meaning the buyer only spent $700k or less in total, but to the rest of the world they can only see the $800k! So that made me realize I can't trust comps/CMAs for other new construction townhouses. The sales prices could be way lower than they appear...
1 comment
Read more

Co-signing as non-primary resident - effect on size of required downpayment & first time home buyer status?

Contemplating co-signing on a house with my mom and splitting the mortgage payment. I currently have a significantly higher income and much better credit than her. I'm looking at potential home costs and related downpayments but have difficulty using some of the online estimators. From my perspective, this would be somewhat of an investment purchase (I intend to stay in my current location in a different state and contribute to the mortgage), however, for my mom, this would be a primary residence. For purposes of the downpayment size and the type of mortgage arrangement, would it be an investment property or a primary residence? Many thanks for any help. submitted by /u/piercalicious [link] [comments] source https://www.reddit.com/r/RealEstate/comments/km4hvl/cosigning_as_nonprimary_resident_effect_on_size/
Post a Comment
Read more