Hello,

I am reviewing the Calculating Cash to Close on a CD where the loan amount exceeds the purchase price due to the fact we are financing all closing cost. From reading the rule, when we have this with a purchase transaction the Down Payment/Funds from Borrower should be a calculated by subtracting the loan amount form the sales price and be shown as a positive number or $0. Since the loan amount exceeds the sale price it should show $0 correct? However our system is calculating this a different way.

Here is what I have:
Sales price: $115,000
Loan Amount: $116,019.11
Closing Cost: $3,298.75
Deposit: $500
Adjustments and other Credits: $1,779.64

The Calculating Cash to Close section is showing:
Total CC - $3,298.75
CC Paid Before Closing: $0
CC Financed: -$3,298.75
Down Payment/Funds from Borrower: $2,279.64
Deposit: -$500
Funds for Borrower: $0
Seller Credits: $0
Adjustments: -$1779.64
Cash to Close: $0

Is this how it should be done or should we manually change the Down Payment/Funds from Borrower to $0 and have a negative cash to close?

They are going to be bringing you a check for $2,279.64 to the closing table - right?

No they are not bringing anything to the closing table. I can't seem to figure out why our system is showing the $2,279.64 in that field.

Where is the money coming from then?? Total costs - purchase and closing costs = $118,298.75

The sales price less deposit is $114.500. Add the closing costs and subtract the loan amount, and you are short $1779.64, which would be the amount this borrower would have to bring to the table.

What are the adjustments that happen to total $1,779.64?

The total cost is covered by the loan amount of $116019.11, the earnest deposit of $500, and the credit for taxes of $1779.64

The $1779.64 is a credit from the seller for real estate taxes

If you subtract the balance of the purchase price from the loan amount, the amount of the closing costs financed is $1,519.11.

That makes sense John. Thanks for the replys.

OK. My error was in double counting the $500 deposit. The closing costs financed is $1019.11 (full purchase price subtracted from the loan amount).



Closing costs $3,298.75
Less financed closing costs ($1,019.11)
Less adjustments and credits ($1,779.64)
Less deposit ($500.00)

Net due borrower at closing $0.00