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Money Up Front As A Downpayment For Mortgage?

Name: Brian  City: New York

Question: When yous use a large volume builder and purchase a home in a development, are all of the costs you are required to pay up front considered equity in the home and applicable as a down payment in the eyes of lenders when the time comes for a mortgage?

Name: Joe | Date: January 30, 2005, 20:55
Answer: Not necessarily. Depending on the contract, money paid to the builder directly as part of the construction contract might be considered 'equity' in the strictest sense, but money paid to a lender for 'points' or origination fees for the mortgage, and all monies paid for title searches, appraisals, deed records and other items are not considered 'equity' and are simply fees added to the cost of securing the mortgage....Your BUILDER may require a certain percentage of the contract in cash up front to originate your building contract with him....This has nothing to do with monies your LENDER will require to originate a contract with him in the form of cash up front payments... You builder contract and mortgate contract are separate contracts and have nothing to do with the other and each will require separate cash monies paid up front to initiate them.