Profile picture for user92875253

Is closing costs normally covered by broker for investment home

Our broker told us they get less commission from the bank for investment home -
1.9% instead of 3.7% - Is that believable?
I know closing costs is normally covered for residential home.
  • February 14 2013 - Santa Clara
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (9)

Your loan officer is supposed to make the same percentage on every deal.If he (or she) is  a mortgage broker or if is a mortgage banker (like me)
the percentage has to be the same on every deal.  He shouldn't charge you more if you are buying an investment property.  This is called his comp
plan which can only be changed with his superiors on a quarterly basis.  If he is a broker it will say on your Good Faith Estimate what he is making.
I can go over that with you if you send it to me.  If he is a banker or if he works for a (FDIC) bank you won't see his fee.  Either way I would be glad to go over the GFE with you.  You can contact me thru my profile.  Good Luck!
  • February 15 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

the commission is negotiable, and the commission that your broker ultimately receives will be stated on your final closing statements

$Good Luck$
  • February 15 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Yes, it is believable, investment property will have a large pricing adjustment and there could be other adjustments for things like credit score, number of units, property type, etc.    Sometimes the adjustments pile up and even when selecting the highest available rate from the lender, the adjusted price will not be enough to cover the broker compensation plus the closing cost.

In this scenario, financing the uncovered costs into the loan amount is allowable and advisable in many cases.   It should also be mentioned that unlike an owner occupied transaction, a broker is not pegged to a certain compensation amount for investment property, they typically have more flexibility to lower their compensation to help make a transaction work best for the borrower.  
  • February 14 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

fannie mae and freddie mac only allow 2% in seller concessions on an investment property. so having your all your closing cost and pre paid expenses covered by the seller is probably not an option. 

What all the other guys here are telling you is correct, you can get a 0 point quote and no lender help towards closing (taking the lower rate) or take a higher rate and get help towards closing from the lender. 
  • February 14 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Simple answer -Generally sellers are allowed to give up to 6% of purchase price as concession for deals which involve conventional financing.  The Lender can also structure the loan to apply a credit which will cover the costs.  Either way is great to keep your out of pocket cost to a minimum.
  • February 14 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If I were you based on what he told you I would get 2 more quotes (at least).  Your options are pretty simple...You can do a loan with no points
closing costs which would raise your rate to give you a "lender rebate" to
pay your costs or you can pay for your closing costs and have a lower rate
by as much as .375% and after 3 years that decision pays for itself.  We can pencil it out to show you that a NO points loan with you paying your
costs will make you money.  The main point is you need to shop him a bit
and I would be glad to pencil numbers with you if you contact me.
  • February 14 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Their commission is not allowed to change based on loan type, however investment property loans are more expensive and there is less revenue/rebate to give to the borrower on them.

A difference of about 1.5% in COST (not rate) is believable, depending on loan type, loan to value ratio, and credit score.

Greg

P.S. it is not "normal" to have the broker cover all your closing costs on an owner occupied property. That scenario is more of an exception (and may actually cost the borrower more $$$ in the long run).
  • February 14 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Brian GFL Capital
it depends on the scenario and the broker. depending on the agreement you have with the broker you can get your closing costs covered for both primary residences and investment properties or agree to pay closing costs for both types of properties.

there is no standard rule
  • February 14 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for daveskow
depending on ltv/ loan amount /  credit scores etc.....closing costs  can  be covered  by  the lender / loan officer   or by home owner.....if  covered by  lender,. rate  will be significantly higher
  • February 14 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.