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#2260233 - 09/24/21 07:21 PM No Closing Cost Purchase Money HELOC
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,979
If we have a no closing cost HELOC and we allow it to be used for a purchase money would the costs required for the transfer be considered closing costs even though they would be paid on a cash transaction. We advertise no closing costs but it is not our intent to pay warranty deed prep and transfer taxes.

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#2260240 - 09/24/21 08:07 PM Re: No Closing Cost Purchase Money HELOC terpsfan
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,617
Galveston, TX
Well, the warranty deed does not concern me, but transfer taxes are definitely closing costs.

4. Misleading terms prohibited. Under §1026.16(d)(5), advertisements may not refer to home-equity plans as free money or use other misleading terms. For example, an advertisement could not state “no closing costs” or “we waive closing costs” if consumers may be required to pay any closing costs, such as recordation fees. In the case of property insurance, however, a creditor may state, for example, “no closing costs” even if property insurance may be required, as long as the creditor also provides a statement that such insurance may be required. ( See the commentary to this section regarding fees to open a plan.)
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2260241 - 09/24/21 08:09 PM Re: No Closing Cost Purchase Money HELOC terpsfan
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,832
Bloomington, IN
If you advertise no closing costs then I'm not sure how you would exempt the transfer taxes from being part of the closing costs.


4. Misleading terms prohibited. Under §1026.16(d)(5), advertisements may not refer to home-equity plans as free money or use other misleading terms. For example, an advertisement could not state “no closing costs” or “we waive closing costs” if consumers may be required to pay any closing costs, such as recordation fees. In the case of property insurance, however, a creditor may state, for example, “no closing costs” even if property insurance may be required, as long as the creditor also provides a statement that such insurance may be required. ( See the commentary to this section regarding fees to open a plan.)
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2260254 - 09/24/21 08:51 PM Re: No Closing Cost Purchase Money HELOC terpsfan
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,979
We would pay the taxes on the DOT recording but the transfer taxes I was referring to would be the taxes on the warranty deed recording. These would need to be paid in a cash transaction. Would you still consider these closing costs?

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#2260257 - 09/24/21 09:01 PM Re: No Closing Cost Purchase Money HELOC terpsfan
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,617
Galveston, TX
I would not consider those loan closing costs - but making a HELOC for a purchase transaction is also highly unusual unless there is a substantial down payment also required.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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