But if the rebates are outlined in the addendum, and the addendume doesn’t make it to the underwriter . . . My mortgage broker seems to be okay with this, but am I running an unmanageable risk with the underwriter?
If a property is listed at $200,000 and market value dictates the property to be worth $250,000, is there a problem with submitting an offer for $250,000 with a $50,000 seller rebate to cover closing costs and miscellaneous property improvements?
Posted by John Corey on June 19, 2005 at 20:02:10:
If all parties (including but not limited to the lender) know the full
details and everyone wants to move forward you have no issues.
Rarely will a lender allows such a deal. They will say the property is
only worth $200K and figure the $250K is someone cooking the deal
to shuffle the lenders money from the seller back to the borrower.
Be careful when you do that since its sounds like you are pulling money out at the front end through escrow.
Sometimes the lender will see this action as a red flag if they audit your loan.
If the appraisal comes back at 250K and the lender is good with that you are probably good to go and you can get credited back at closing for 100 %financing.
The only problem is conventional lenders will not allow this to take place. They have set limits of seller credits allowed 9if any) ranging from 3-6% and it must be used for the closing costs or it goes back to the seller…