What the difference between the CD and Preliminary Closing Disclosure? My lender is requesting this from my attorney. I thought this is something they would provide for me to review. They want to make sure I’m getting enough money from the sale of my current home to buy the new home.
Hey Eric. OK a few things going on. When you are selling/buying and rolling equity into the next one, the lender on the home you are buying will need that prelim CD from the sale of house to document how much you are getting. Its basically an asset document requirement. Say if you were paying with your own funds, they would get 60 days of bank statements. Since the cash is coming from the sale of your home, the amount you're getting needs to be documented, same as any asset.
How is that done if we are doing a simultaneous closing on both the house we are selling and buying? Seems like we can’t get that document until our house sells first. It we can’t schedule a close until they have the document? Seems like a broken loop
Not exactly. The first CD is sent out to expire the 3 day wait, and we usually get them at the initial Underwrite. If there is a condition we cannot clear like a mortgage late, new debt to push the DTI too high etc then we can't close even if a CD was issued.
What if my closing disclosure doesn’t have prepaid property taxes on other costs Line G initial escrow payments? It’s just blank but on page 4, it says you will have an escrow account for now
Would you be adding the “estimated taxes, insurance, and assessments” to the monthly payment? If I do that, our monthly is over $400 than we talked about with our LO. Am I reading this wrong?
Depends on what option you picked. If you chose or must escrow depending on your scenario then your taxes and insurance will be part of the monthly payment. If you're in an HOA, that fee is NOT part of the payment; its paid separately. If you "waived" escrows and decide to pay them when they are due yourself, those expenses are still shown to account for them in the debt to income picture.
Yes. That is for property tax prorations or anything the seller pays in advance such as HOA dues. Basically you buy the house sometime during the year but you didn't own it the whole year, but the seller paid the whole years taxes. So how do you reconcile that? With Prorations based on the day you take ownership. In Florida we have ad valorem and non-ad valorem taxes. One is on a calendar year and the other on a fiscal year. Lets look at the bigger bill, the ad valorem. Tax year is Jan-Dec. So today is May 25th. The seller owned the home from Jan 1-May 25. So those are items the seller is responible for but unpaid by seller. They are a credit to the buyer because the buyer will have to pay the full tax bill when it comes due, so they get a credit for the portion the seller lived in the home.
