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Payoffs Prior to Closing & Cash to Close

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  • August 31, 2020 at 5:35 pm EDT #32559
    jes_1000
    Member

    Trying to get to the bottom of this… We have a scenario on a purchase loan where a few debts will be paid by the borrower prior to closing. I understand that if PAID at closing the payoffs would be in calculating cash to close on the LE and CD. I’m having a hard time wrapping my head around the paid prior to close piece of this situation. Would we include the payoffs on the Loan Estimate in Adjustments and Other Credits in the Cash to Close calculation but have nothing on the CD – since they were paid prior to closing? It doesn’t seem right – I feel like I’m missing something. Much appreciation for any input or guidance.

    September 2, 2020 at 6:45 am EDT #32577
    rcooper
    Member

    I’ve sent your question to Jack and he will respond soon. Thanks for your patience.

    September 2, 2020 at 8:33 am EDT #32578
    jholzknecht
    Keymaster

    Borrowers frequently payoff existing debt to improve their credit score. Typically those debts are paid with the borrowers own funds. If that is the case, the paid debts are not part of the transaction and are not reflected on the LE or the CD.

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