Explanation of Mortgages and Agreement

**ryanb4614** · 07-03-2011, 05:58 AM

Hello. I am a first time home buyer in the state of Pennsylvania. I need some clarification on everything I have done so far.
-Does Pennsylvania or Federal offer any grants anymore for first time home buyers?
-The current Preliminary cost estimate I got from my bank is the following information Interest rate 4.375% points: 0....This is a FHA loan with 3.5% down. I am having a hard to finding a better rate.

Next the agreement was that they seller is to pay the 6% buyer's assist. My offer for the house was $89,000, seller accepted the offer. But on the agreement I cannot find $89,000 anywhere. It has the following numbers:
-Purchase Price: $94,600
"Seller will pay 6% of purchase price toward buyer's cost, as permitted by the mortgage lender.
-Loan amount $92,000
-Minimum Term 30 years
-Type: FHA
-Buyer agrees to accept the interest rate as may be committed by the mortgage lender not to exceed a maximum interest rate of 4.5%

So I have to come up with the 3.5% for closing?? (already put $2,000 down with the offer). How is the loan $92,000 when I am putting 3.5% down (is it remainder of closing fees?)

When I am apply for different mortgage rates I am trying to find a better deal, when it ask price of house do I put $89k or $94,600? I am trying to understand this as it is very confusing to me being a first time home buyer. I don't want to make a mistake or miss out on anything else out there that I could get better rates etc.

**Greg** · 07-05-2011, 08:47 AM

You can not find $89,000 on the contract because you are not paying $89,000. You are paying $94,600. If you subtract the 6% the seller is paying for your closing costs from the $94,600 you will find your $89,000.

If you subtract your 3.5% down payment from the $94,600 purchase price you almost get the $92,000 loan amount. This number on your contract is not all that important.

The $2,000 you already put down will be applied to your down payment at closing.

The loan numbers on your contract are only there to make the contract contingent on you getting the loan written in the contract so the accuracy is not that important.

The important dollar numbers on the contract are the purchase price, the seller paid closing costs and the final price.

When you are shopping for rates the purchase price is $94,600 with $6,000 in seller paid closings costs.

**ryanb4614** · 07-05-2011, 07:07 PM

So I am guessing the realtor put the 6% on top of the $89k instead of subtracting it. Thank you Greg you were a great help.

**princegebauer** · 07-05-2011, 10:13 PM

you are right dude, well, it was really of great help!

**jumpingspidermedia** · 07-06-2011, 07:07 PM

Originally Posted by Greg

You can not find $89,000 on the contract because you are not paying $89,000. You are paying $94,600. If you subtract the 6% the seller is paying for your closing costs from the $94,600 you will find your $89,000.

If you subtract your 3.5% down payment from the $94,600 purchase price you almost get the $92,000 loan amount. This number on your contract is not all that important.

The $2,000 you already put down will be applied to your down payment at closing.

The loan numbers on your contract are only there to make the contract contingent on you getting the loan written in the contract so the accuracy is not that important.

The important dollar numbers on the contract are the purchase price, the seller paid closing costs and the final price.

When you are shopping for rates the purchase price is $94,600 with $6,000 in seller paid closings costs.

This really clarified the matter. You're a good help Greg!