#93 Monday Morning Mortgage Tip: Justin Froiland with Fairway Mortgage

Posted by Shane Andersen on Wednesday, July 17th, 2019 at 7:41am.

Every Monday Morning at 8:15am, join me on my Facebook page as I sit down with a local lender, and do a live interview and talk about a Mortgage Tip that may help YOU with your next Real Estate Purchase. 

This morning I sat down with Justin Froiland from Fairway Mortgage. Listen as Justin explains the different criteria for seller-paid closing costs, and the maximum amount you can ask a seller to pay. You can reach Justin at 605.695.1429 or justin.froiland@fairwaymc.com.  His office is located at 412 5th St., Brookings SD 57006 or on the web at www.BrookingsMortgage.com 



 Seller-Paid Closing Costs


- Alright, good morning everybody. Shane here from the Brookings Home Team powered by Century 21. 8:15 Monday morning, Justin Froiland, Fairway Mortgage, got him right here beside me as you can see, I hope. You can see I'm touching him. He's here today to talk about a tip here, a mortgage tip for you guys. Before we do that, as always, as you're jumping on here, please let us know, give us a heart, give us a thumbs up and please feel free to share this video with anybody else you think would be interested in viewing it. So with that being said, Justin, what kind of tip do you have for us today?

- Perfect, thank you, Shane. Today I wanted to spend a little bit of time talking about seller paid closing costs and the maximum you can ask the seller to pay in those closing costs. I've been asked by a couple of different people lately, and there's not really one straightforward answer, because it's strictly dependent on the loan program that you are using. For example, if you're looking at using an FHA or a rural development loan program, you can actually ask for up to 6% of closing costs credits, and that's going to based on the purchase price. And if you're doing a VA loan, you're maximum is 4%, and when you get into the conventional loans it gets a little bit more intricate, there's that. It's kind of on a step level. So if you're putting less than 10% down, you can only ask for 3% in closing costs credit. If you're putting between 10 and 25% down, you can actually ask for 6%, and if you're putting more than 25% down, you can ask for 9% in closing costs credit.

- And that's the conventional?

- And that's the conventional, correct. And to add one more step to that, if you're purchasing an investment property, no matter how much you're putting down, you can only ask for a 2% closing cost credit. So those are the basic different percentages that you can ask for on the different loan programs. One other I wanted to touch base on real quickly is within the purchase agreement, that when you're working with Shane to go through and put an offer in, there's a section, it's actually called section 14 of the purchase agreement where it references the title services closing fee, and I've had a couple people be under the misconception that that is referencing paying if you were to indicate there in the purchase agreement that you're doing 50%. Seller 50%, buyer, I've a couple of people misunderstand that and think that that was referencing the closing costs as a whole, when actually, in all actuality, that's actually just representing one $350 fee, so it can be quite a surprise if you weren't understanding that fully, as I was telling Shane before we got on here, one of the last times that came up was someone that was trying to purchase a house on their own, for sale by owner, not working with a real estate agent, which just gives you one more good reason to give Shane a call and work with him, because I know he goes through that very thoroughly with you in that step of the process. So that's kind of what I wanted to mention. There is Shane, any questions at all?

- Yeah, I wanted to touch just on that closing service fee, because that is a good point there, and it is number 14, kind of on that, with the fourth page there of the purchase agreement or something. Just make sure you understand what that is, it's a closing service fee, and that's the fee that the title company charges to get everything prepared and ready to go for you. It's not like Justin said, the total closing cost.

- Correct.

- It does have closing in it, that it's a closing service fee, so make sure the agent does explain that to you, and we do have the two title companies here in town that are very similar in their fees, but still got to make sure you understand that, but correct. I keep saying I wish they would change it to be called, and some people do call it the settlement fee, which I think is a lot more clear as to what that is. But yeah, like Shane said, just make sure you're aware of that.

- We know there's a lot of different fees that you look at as you're going through this process, so just try to keep them all straight, but thank you, appreciate that. So that is today's Monday Morning Mortgage Tip, we'll be back next Monday. Hopefully it's a great week for everybody. No rain, we don't need any more rain.

- But not too hot, not too hot.

- Yeah, not too hot too. And I just want to quick blurb out here to wish all the soccer teams that are coming here for the big soccer tournament good luck as you come out here if you guys are on a team. Look for me, I'll be out there most of the weekend and cheering you guys on. Thanks again for watching guys, we'll be back next week, have a great rest of the week. We'll see you.

- Thanks guys.



Thinking of selling and/or moving to Brookings, Volga, or any surrounding areas? Got questions? I’m here to help! Visit BrookingsHomeTeam.com for more details!

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