Sep 28 2018 62765 1

Dated: 09/28/2018

Views: 73

Good afternoon everyone and I hope everyone is starting to dry out.  Looks like 1 more line of showers this afternoon and then we are in line for a pretty nice weekend. I have wanted to send this one out for a while but also know this one can open Pandora’s Box!!

 

You did read the subject line correctly! We can use seller concessions to pay off debt to help a Veteran qualify for a VA Purchase. 

If you remember from your training, the seller can pay up to 4% of the purchase price towards closing cost, pre-paid, etc.  Well part of that etc includes debt. Now, before everyone goes crazy here, this obviously will not work on lower loan amount due to the nature of cost included in a mortgage (remember BBMC has no lender fees for VA loans!!).  However, if you have a purchase price that is relatively higher, you may have quite a bit of funds left over to consolidate debt.  Let’s use a $300,000 purchase price (come on, that’s realistic in this area!!), that gives us a possible $12,000 in seller paid concessions, closing cost on that may run 1.5% on a loan that size once the seller tax proration is added back in. So that is $4500 in actual closing cost and pre-paids.  Well that gives us $7500 to play with to help the Vet if their debt to income is too high or they do not meet the residual income requirement.  Now that dumb boat they bought or that high interest credit card can be paid off and now they can qualify.  Yes, the house also has to appraise!!!

 

Language required on the purchase contract for debts to be paid off

If a seller agrees to pay for the Veteran’s debts in a purchase, then there needs to be very specific language on the purchase contract.  The wording needs to state specifically that the seller contributions are to be used for “debt payoff” or it can have a general line like “seller contribution to be used for closing costs, pre-paids, and other items at borrower’s discretion”.

 

I can already hear everyone’s brain going crazy on this because we have all been in this situation just maybe not with a Veteran, but remember this next time or just give me a call and let’s talk!!

 

Tony Fragale
Branch Manager

877-315-0683 x7014 - Office
615-579-2835 - Mobile
630-448-3178 - eFax
NMLS -  76480
[email protected]
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Jenn McMillion

Serving the residential real estate needs of buyers and sellers in the Clarksville/Fort Campbell and surrounding areas. I was transplanted from California in 2004 when I joined the Army and was stat....

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