How is Closing Costs Financed (Paid from your Loan Amount) determined?

On the Loan Estimate for transactions without sellers, the closing costs financed is the sum of the Loan Amount and Estimated Total Payoffs and Payments. If the results of the calculation is a positive number and is less than or equal to the Total Closing Costs, Closing Costs Financed is this amount. If it is greater than Total Closing Costs then Closing Costs Financed equals the value of Total Closing Costs. If the results of the calculation is a negative number or $0, it is disclosed as $0. When Closing Costs Financed is not $0, it is disclosed as a positive number.

For example: If the loan amount is $100,000, estimated total payoffs and payments is $-80,000, and the total closing costs is $10,000; then estimated closing costs financed (paid from your loan amount) would be $10,000.

On the Closing Disclosure the only difference with the calculation of the Closing Costs Financed from the Loan Estimate is the cap amount is equal to Total Closing Costs less Closing Costs Paid Before Closing (i.e. Loan Costs and Other Costs that are paid outside of closing). Using the example above, closing costs financed would be $9,000 if closing costs paid before closing was $1,000.

On the Loan Estimate for transactions with sellers or transactions when Use Seller Disclosures on Non-seller transactions is selected, the closing costs financed is the difference between the Loan Amount and Payments to 3rd Parties Not Disclosed in Total Closing Costs or Disbursements Not Disclosed in Total Closing Costs. If the results of the calculation is a positive number and is less than or equal to the Total Closing Costs, Closing Costs Financed is this amount. If it is greater than Total Closing Costs then Closing Costs Financed equals the value of Total Closing Costs. When Closing Costs Financed is not $0, it is disclosed as a negative number.

For example, if the loan amount is $100,000, payments to 3rd parties not disclosed in total closing costs is $80,000, and the total closing costs is $10,000; then closing costs financed (paid from your loan amount) would be $10,000. This amount would be disclosed as $-10,000 on the Loan Estimate.

On the Closing Disclosure, the closing costs financed is determined by subtracting the Sales Price, Liabilities where Payoff is selected, and Construction Costs from the Loan Amount.

If the results of the calculation is a positive number and is less than or equal to the Total Closing Costs, Closing Costs Financed is this amount. If it is greater than Total Closing Costs, the Closing Costs Financed equals the value of Total Closing Costs. When Closing Costs Financed is not $0, it is disclosed as a negative number.

For example, if the loan amount is $100,000, payments to 3rd parties not disclosed in total closing costs is $90,000 (the sales price $85,000 and liabilities that will be paid with loan proceeds $5,000), and the total closing costs is $5,000, the closing costs financed (paid from your loan amount) would be $5,000.

For additional details, refer to the TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure forms located at: http://www.consumerfinance.gov/regulatory-implementation/tila-respa/.