Video Summary

How much money is saved if you pay cash for a closing versus obtaining a mortgage?

If you are a cash buyer your customary closing cost consists of recording the deed, if you wish a survey, the cost of the survey, a home inspection, which I would recommend, but you would pay for the cost of the home inspection and any termite inspections.  Otherwise your only cost that you have would be the cost of recording the deed.

You would need to look at the contract closely to make sure that there’s no closing fee by the title agent when you look at the contract.  If you obtain a mortgage or go get a mortgage from an institutional lender, you are looking at probably spending a couple of thousand dollars with the lender in order to pay their processing fees and their appraisal fees and various costs and charges including the documentary stamps and intangible tax on the mortgage.

It is going to cost you at least a couple of thousand dollars to go through the financial lender.  If you have an owner financing; meaning the seller is financing the property for you, you would still have documentary stamps and intangible tax on the note and mortgage which is $5.50 per $1000 that you would have and some additional recording costs and possibly closing fees and title insurance.

You save a substantial amount of money if you pay cash at closing versus obtaining a mortgage particularly from an institutional lender.

If you have any questions about that give me a call at 727-847-2288.

Video Summary

Can I finance a home for my children?

That has been something that’s been done for many, many years. Parents want to help out their kids and they sometimes take out a mortgage on their house in order to give their kids financing and they secure it with a note and mortgage.  Sometimes they do it so that if the child is married to someone that they are concerned about they will make sure that, if there’s a divorce or anything like that, that they are still protected to get their money back or they can afford to give a gift to the child.  That is something that has been going on for as long as I’ve been practicing law.

However Congress has now passed what is called the Dodd-Frank Act and it is very comprehensive; it is over 1,000 pages of legislation, and it is designed to control financial institutions in consumer financing.  Under this bill, they say that you have to comply with a qualified mortgage, which is a 30 year mortgage and has all sorts of requirements under it and interest rates that you must comply with, if you are going to provide financing to a third party; which would include your children.  This does not make any sense.

This does not apply to sellers who are selling their property and then taking back a note in mortgage; that is called a purchased money mortgage, and sellers can do that once a year.  It also does not comply with if its investment property and not their home.

In answer to your question is if you do do the financing for your children and your mortgage does not comply with Dodd-Frank it is subject to various penalties and I don’t know whether or not they would ever have a defense if they choose to assert it as to the enforceability or the penalties in a foreclosure action if you attempted to foreclose a mortgage that does not comply with Dodd-Frank.

They made it extremely difficult and it does not make any sense whatsoever and would hope that if you are frustrated by this you might want to write to your congressman or senator and suggest that the amendment be made to Dodd-Frank which would allow family members to lend money to other family members and not be subject to the regulation and the law under Dodd-Frank.  That is a very long answer and however it is unfortunate.

If you have any other questions I’ll try and answer them; about Dodd-Frank and owner financing.

My phone number is 727-847-2288.

Video Summary

Who pays for title insurance?  Well, title insurance is issued in conjunction with the sale of real property.  The sale of real property is governed by a contract between the buyer and the seller.  The provisions in the real estate contract indicate who is to pay for the title insurance premium and the closing cost as well as the other closing costs such as the documentary stamps.  It is controlled by contract.

The Pasco County or Tampa Bay Area it is customary for the seller to pay for title insurance.

If it is a cash transaction the only closing costs the buyer would have would be a home inspection, a survey, termite inspection, and the recording of a deed.  That is the custom in this area, although it is controlled by contract and if you are selling your home you can show that the buyer is to pay for the closing costs and pay for the title insurance.

The title insurance cost is usually shifted to the buyer if you are buying a new home from a developer; they usually shift that cost to you, to a buyer.

Hopefully I have answered your questions about who pays for title insurance and if you are selling your home and would like for me to prepare the contract please give me a call at 727-847-2288.

Video Summary

Why is my mortgage lender asking if my checking account and bank accounts have been seasoned?  This is all as result of the crash and the Dodd-Frank bill and that there’s any number of requirements now, the lenders to make sure there’s no fraud involved.  They want to make sure that this is your money and they want to know the source of it, so that someone just doesn’t lend you the money temporarily and you put it in your account a day or two before the closing to show that you have sufficient funds.  It’s getting more difficult to get a loan, and sometimes a gift of equity or a gift of the deposit, is something that’s going to be scrutinized by your lender.

So that is the reason for the lender to ask if your account has been seasoned.  They are checking on everything as a result of the oversight and the underwriting requirements after the real estate crash and all the problems involved and it’s to try and avoid any kind of fraud involved.  So going through and obtaining a mortgage now from a conventional lender is very time consuming and tedious mainly because of the additional regulations that have been imposed on the lenders in this particular market.

So if you have any questions about your loan and the closing process, well give me a call at 727-847-2288.

Video Summary

Does a FHA mortgage have more cost and requirements than a conventional loan?  There are no additional costs involved, as far as an FHA loan that a seller must bear as far as the closing is concerned.  In some instances they may require them to pay a $79.00 tax service fee, but other than that, there are no particular additional costs that must be borne by the seller if he sells to someone who’s getting an FHA loan.

FHA loans however do have a contingency that if the property does not appraise for the amount necessary to obtain the loan, then the deposit must be fully refunded.  So whenever you see that a buyer’s getting an FHA loan you really need to be concerned about the appraisal and the deposit needs to be fully refunded.

As far as the buyer is concerned they have to, of course, be credit worthy and they will have the additional cost since it’s a high cost loan so they charge for the insurance or the cost of the high priced loan in that you can get a 97% and possibly even higher percentage loan. That’s the primary increase in the closing cost, is the mortgage insurance if you will or what is charged by FHA for the high percentage loan to value which you may have to pay, continue to pay or there may be a lump sum amount in your monthly payments or there may be a lump sum amount in the front end of an FHA loan. But as far as the seller is concerned there are no additional costs. However, if there are any, it’s nominal; the same thing with the VA loan. I may have that confused at the $97.00 or $76.00 for a tax service fee, something that a seller has to pay.

So the biggest thing is whether or not the people will qualify money-wise and whether the property will appraise for the amount necessary to get a FHA loan.  So if you like to sell your house or need some help with financing or closing the transaction, well give me a call at 727-847-2288.