I am new construction-first time home buyer. I want to know following one thing.
What is the maximum amount of fund you can reserve in Escrow account as per rules.. E.g. If total amount including Home Insurance and home's property taxes, etc.. is $6000 per (12 mths)year. So How much (maximum) I can reserve in Escrow as per the RESPA? As I know based on some guidelines that you can keep AT LEAST 12 mths + cushions(1/6 of 12mths). So here in this case it will be 6000 + (1/6)*(6000) = $7000. Please advise and give your view on this. Is this correct, if not please correct me.
The reason of asking this question is ... My mortgage company will give me 5% seller assistant (discount) on closing cost. Currently my total Closing Cost is only 4%. I am asking them to reserve more funds (remaining 1%) towards Escrow account. And they dont want to reduce home sales price. In escrow, they have considered only 7 months. I am asking to increase that, but they are not giving me any answer.
Any help would be appreciated..
Jigar & Nilpa Shah
Not sure if you are a legitimate poster or not given the poll you have posted along with your first post here, so am hesitating to respond, but will tell you that escrow amount are just that - **$ to be held in escrow to pay obligated expenses such as taxes and insurance. Are you being sincere or just trying to play here?
ETA: Okay, I have re-read your post and see you are dealing with a development company. Run, don't walk, away from this scheme...This message has been edited. Last edited by: Idaho Resident,
Been a few days, OP, and I see that no one has posted back on your thread except myself. So, it is one of two things - either people are thinking that you have posted a bogus thread OR you haven't made yourself clear as to exactly what your inquiry is...
For myself, I am a bit confused as well. If you are saying that your mortgage company will give you a 5% seller assist re closing costs and the true closing costs are less so you want your sellers (the development company) to add in additional escrow costs to benefit from this provision, well, I can totally understand their reluctance to do that - sounds like fraud to me.
Post back with more particulars if you are serious about wanting some help.
PS. The answer to your thread as originally entitled is that there is a mathematical formula as to maximum escrow - twice we have received checks for the excess deposited in our account in the last 7 years - basic math.
Sounds to me like, instead, you are wanting to play games to maximize some closing benefit - NOT a good idea especially if you are a first-time home buyer. Play by the rules, laws and regulations in buying your first place. Play games later, if you choose, which I don't suggest...
IR, I am reading this post a little differently.
I've seen several new posters start with a poll instead of the simple questions, just because they don't know how to post, and we've also seen some posters never come back just because they don't know how to find their original post.
I do not know the actual circumstances of this buyer, but I think the poster is buying a new construction house from a developer who does not want to lower the sale price (common in a development to keep sale price high)but will make other concessions.
I'm reading into this the poster is mixing the lender and the seller, I may be wrong.
I do not know anything about the limit of impounds as I always try to avoid them. If the OP wants to maximize their value, they might try to get the seller to add another amenity.
Wish you the best on your first home!
Meischa, I'm glad you posted back as I agree that sometimes new posters don't know how to find their way back and/or don't realize that starting new polls can be a bit suspect during the first post.
To be honest, that is why I posted my 2nd response since no one else had responded. I agree OP is trying to play off the seller and lender - not a good idea - but would like to have more info before I comment any more. So, OP, please post back and you just might find a wealth of information here... give it a try.
Thanks for reading my post.
Yes You(both) may be right, As I am new in this field so I don't have any experience to post in detail question on wall. But I tried my best. I don't want to play games.We(my family) are buying our dream house first time in our life. I have asked simple question "What is the maximum limit amount you can reserve in ESCROW Account". According RESPAct rules on HUD website, it seems it may be 12months. But I want to hear or to know from someone who has really good experience in this field. That's why I posted and explained extra ACTUAL details.
Again thanks for your time.
Nil Jig, Glad you posted back and are sincere - a belated Welcome to the Real Estate Boards!
There is a mathematical formula lending institutions must follow and I believe that it roughly equates 12 months. Where I had a problem with your original post was that it sounded as if you were wanting the seller to charge off more escrow against the closing costs so as to take advantage of the 5% discount offered by the lender.
I can tell you that it is NEVER a good idea to play with the numbers ~ especially when you are buying your first home. Hope it goes smoothly if you have made the decision to buy. Keep us up-dated and good luck!
Thanks IR for your time and input.
That's what I guess and found.
I just got reply back from my builder and loan agent that they suggest me to buy down your interest rate--that is the best use for the remaining money of discount.
Is there any cache in that.. Do you know what should I ask for buying points..
Fact: I do have really good score. So will they give me less % IRate based on Market Rate..?
What do you suggest and what should I ask during this conversation.
Well, first of all, since it is a development company - they hold all the cards which is why I suggested you run, not walk, from even considering buying there. But, if you are insistent that you want to buy, nevertheless, there are a few things you can do.
When you show up for the meeting - with your spouse which they will require you to do - make sure she knows her part to play. "You are anxious to buy - she is not." Both of you are concerned - let them offer up the solutions to ease your worries. In other words, don't ask anything...
Act agitated and not sure - ready to walk out - until one of them comes up with something that "dangles" the carrot - probably some amenity you have expressed interest in. Give it some serious thought and THEN say that the interest rate is simply not going to work for you. Thank them for their time and head toward the door...
Chances are they will come up with another benefit - including a reduced interest rate. If they don't stop you from walking out the door, consider yourself lucky.
If they do and the offer re rates is attractive, DON'T SIGN ANYTHING RIGHT THEN. Gather up the papers and tell them you will get back to them asap as soon as your attorney has reviewed them. If they tell you that the offer is only good right then, move on.
If they let you go with the papers, do consult an attorney - you might just get yourself a good deal. Buyer beware...and good luck!
Thank you very very much.
You have explained real practical situation. Thanks again.
Sounds like you do not have a buyers' Realtor and you are dealing with the seller direct- the builder.
Also sounds like you are using the sellers preferred mortgage company and in return
you are being offerd an incentive/discounted amount on your closing costs.
Important that you include in any contract dealing direct with a seller including a "builder" contingent upon your attorney's review and approval, and contingent upon a home inspection.
I am now leary of some well known national home builders, from experience.
However always start your homebuying process with a good buyers' agent.This message has been edited. Last edited by: real estate lady,
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