October 10, 2018 at 4:16 pm #45607dreamhome2018Member
My buy down funds plus an outside grant are enough to bring the interest rate down to 0.125%. I’ve asked for closing costs from the seller, but can not use it to reduce the interest rate any further as 0.125% is the lowest the lender allows. My realtor has stated that buyers can not legally apply seller closing contributions towards principal reduction. I have the MRF for closing, since that was required in order to be qualified, but I’ve read on this forum that seller contributions can not be used for closing costs like property taxes, insurance, and escrow. That’s the only expense I have left. So what can then be done with the seller contributions? If I don’t use the funds, then I must by law give it back to them — basically I use it or lose it. I cannot further reduce my rate below 0.125% so it can’t be used there. I’d hate to walk away from funds. I’d really like to be able to use the seller’s contributions towards the prepaids that will be collected at closing. I understand NACA’s general rule against this, but is there any way or anyone to appeal to regarding using the contributions to cover escrow, etc., because I’d be losing money that cannot be used in any other way.October 10, 2018 at 4:54 pm #45610southfloridaMember
I don’t think you can use seller contribution for prepaids, what you can probably do is use the seller contribution for interest buydown and your funds for a combination between interest buydown and principal reductionOctober 10, 2018 at 6:39 pm #45614dreamhome2018Member
@southflorida thank you for responding. I’d really hoped I’d be able to use it for prepaids since this is allowed with other lenders. I think being able to use seller concessions towards prepaids would greatly benefit people who:
A) through a combination of their own contributions (the 7 points max that buyers can purchase) plus the NACA lender matching grant do not need seller concessions for buy down but would like to use seller concessions for other closing costs (I’m referring to individuals who have the MRF and are qualified).
B) people who through a combination of city/state/homebuyer grants and their own contributions do not need seller concessions for buy down but would like to use seller concessions for other closing costs (I’m referring to individuals who have the MRF and are qualified).
C) people who through one or more outside grants alone, do not need to use seller concessions or even their own money for buy down but would like to use seller concessions for closing costs (I’m referring to individuals who have the MRF and are qualified)
I’m sure there are scenarios where people have received multiple grants from their city and or state that have completely covered the buy down funds needed to get their interest rate down to 0.125% or 0.0625%. As it stands NACA is essentially making members turn down closing funds from sellers because we are not allowed to use them towards our only remaining expense — prepaids. I do understand the members must have MRF prior to qualifying but if your seller is giving you additional money that is not needed for buy down and you have already met your MRF requirement, why is there a rule preventing us from using it for escrow, homeowners insurance, property tax, etc., that is collected at closing?October 11, 2018 at 7:32 am #45616Nykeima14Member
Hi, what grant did you find that works with NACA. You are the first person on this forum finally got one to work.
ThanksOctober 11, 2018 at 3:08 pm #45634southfloridaMember
Just to clarify, I think you can’t but confirm with your MC or CC
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