Prepayment Penalty Added 1 Hour Before Closing
I bought a HUD home this week. I worked with a broker I have done 4 deals with this year. I had all intentions of holding the property as a rental so I went with 30 yr. fixed program with no prepay. A friend of mine was looking for a home, since it was vacant I could show it to him. We worked out a win-win situation and he decided to buy it. Being loyal, I referred him to my broker two days before I closed on it. My broker emailed me right before closing that they faxed a letter to the title company stating I would need to pay them $2300 if I sold the property within 6 mos. They said because they will get their entire commision taken back. I refused to sign and under pressure they got me to sign the same letter for $1000. Is this legal for them to do? If I would have just kept quiet and not referred the buyer, there is nothing they could have done. I had planned to give the broker $500 out of good faith for the work he put into it. They also have a $495 fee they charge on every deal for processing I paid anyhow. What should I do?
apexnotes,
Thanks for the reply. Can you give me an example? What is the definition of a note? Is it a title or something that I hold on to? You stated this below,
"Basically, over time you can make out well because you will realize the interest return that the major banks do."
Can you break this down for me?
Thank you
Where are you located?
I am just reading here:
http://www.thomas-law.com/latestnews.html
Very useful information.
If you are using a title company for the transaction then use them them create all the documentation necessary. You can either list the terms of the loan in the sales agreement or an addendum, either way it would be documented with the sale.
You will pay short term capital gains tax. Your trade will be considered a sale. Trading in a 1031 exchange however is for investment property. Your primary residence is not that.
On top of that does the seller show any interest for such a feat? Also you could even look for someone that likes your house to do a formal assumption and carry a second.
Have you considered having someone take your house sub to or lease option. How is your credit, can you own two houses with someone else making payments on one?
So I assume that "just by look" means that you have not been inside? If so, then get inside and see if that does not cool your jets.
Rule of thumb on closing costs for a loan is 3-5% of the loan amount. $3000 sounds normal. Works out to be about 3.75% of the loan..Here in NY its always almost closer to 5%. If youre still not happy with that, take the GFE (good faith estimate) and have your RE attorney review it...