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#1959806 - 09/05/14 07:06 PM Cash to Borrower at Closing FHA Purchase Loan
WHEDA Offline
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WHEDA
Joined: Apr 2009
Posts: 189
Wisconsin
I searched but came up with nothing, so I'll ask - If a borrower has paid an atypical amount of earnest money (say $2,500) when entering into a purchase contract then they finance 96.5% of the price plus the UFMIP, receive a closing cost credit from the seller and obtain grant funds for down payment and closing costs, all of which exceeds the amount needed to cover the down payment and costs, can the borrower receive some or all of the earnest money back in cash (check) at the closing. All I have been able to find in the HUD Handbooks is 4155.2 6.A.1.d which states "a per diem interest credit may not result in cash back to the borrower".

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#1959808 - 09/05/14 07:11 PM Re: Cash to Borrower at Closing FHA Purchase Loan WHEDA
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,557
Cape Cod
Just because the math almost always results in a net amount due FROM the borrower in a purchase transaction, that doesn't mean that it will always be the case. If the HUD-1 math is such that the credits to the borrower (including loan proceeds) exceed the charges to the borrower (including the purchase price net of earnest money), the borrower comes away from the table with more than he sat down with.
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#1959810 - 09/05/14 07:13 PM Re: Cash to Borrower at Closing FHA Purchase Loan WHEDA
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,557
Cape Cod
And it's certainly more likely to happen with a high LTV loan than with an 80% LTV transaction.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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