I’m posting a redacted copy of my Loan Estimate and I need help understanding what to negotiate, what questions to ask, and how to make sure the credits are being applied in the best legal way.
This is a HUD Section 184 loan through Click n’ Close / 1st Tribal. I’m not trying to blow up the deal. I actually want this loan structure to work because the monthly payment is much better than my FHA/DPA alternatives. My biggest concern is making sure I don’t get blinded by the low cash-to-close number while the lender uses seller credits and DPA to absorb fees in a way that may not be best for me.
Basic loan structure:
Purchase price: $430,000
Loan type: HUD Section 184
Loan amount: $424,528
Rate: 6.000% fixed
Term: 30 years
Rate lock: not locked yet
Principal and interest: $2,545.26
Monthly mortgage insurance: $0
Estimated escrow: $528
Estimated total monthly payment: $3,073
Estimated closing costs: $24,635
Estimated cash to close: $232
Credits shown:
Seller credits: $16,475
Adjustments and other credits: $12,900
Deposit: $500
Section A origination charges:
Discount points: 2.405% = $10,210
Administration fee: $1,299
Processing fee: $525
SmartBuy admin fee: $500
Total Section A: $12,534
Other major costs:
Appraisal: $750
Mortgage insurance premium / Section 184 upfront guarantee fee: $4,203
Prepaids: $2,767
Initial escrow: $2,331
Owner’s title coverage: $1,025
Important context:
The $10,210 in points is not automatically something I want removed. I know a lot of people will say “don’t pay points,” but the 6% rate is important to me because I care more about long-term monthly stability than just reducing upfront fees. I am trying to build a future that cannot be taken from my family, and a low fixed payment matters a lot.
There is also a SmartBuy / DPA / silent second involved. My understanding is that it helps cover the down payment, but there may be a 10-year forgiveness period. That makes me nervous because refinancing before the forgiveness period may trigger repayment unless the second can subordinate.
My biggest concern:
I want to make sure all actual required and allowable closing costs are taken care of first before credits are used toward optional lender-controlled items.
I am not asking for cash back. I understand that is not allowed. I am asking how to make sure every available credit is applied in the most borrower-beneficial and legally compliant way before anything is wasted, reduced, or absorbed by unnecessary lender fees.
My priority order would be:
Keep the 6.000% rate if the points truly make sense.
Keep cash to close as low as legally possible.
Pay required closing costs, prepaids, escrow setup, title fees, appraisal, and government fees first.
Keep owner’s title coverage included.
Then use remaining allowable credit toward discount points, upfront guarantee fee treatment, principal reduction if allowed, or any other legal borrower benefit.
Do not waste seller credits.
Do not create cash back to borrower.
Questions I need help with:
On a Loan Estimate, can a borrower request that seller credits be applied first to required closing costs, prepaids, escrow setup, title fees, appraisal, and government fees before they are applied toward discount points?
Is there an actual “order of application” for seller credits, or do all credits just offset total cash to close as one pool?
Should I ask the lender for a written fee worksheet showing exactly how the seller credits, DPA credits, and other credits are being applied?
Should I ask for a 0-point par-rate quote just to compare, even if I may still keep the 6% rate?
Does $10,210 in points make more sense if the SmartBuy / silent second could effectively keep me in this loan for up to 10 years?
Do the admin fees look excessive or stacked?
Administration fee: $1,299
Processing fee: $525
SmartBuy admin fee: $500
Total admin/processing-type fees: $2,324
What exact questions should I ask about the SmartBuy silent second?
I’m especially concerned about:
Forgiveness schedule
Refinance consequences
Sale consequences
Whether payoff is prorated or fully due
Whether the second can subordinate to a refinance of the first mortgage
What should I ask before locking the rate?
I want to know whether locking changes the rate, points, lender credits, seller credit usage, monthly payment, or cash to close.
For HUD Section 184 specifically, what should I watch for that is different from FHA or conventional loans?
Since the Intent to Proceed has already been signed, can I still negotiate fees, points, and structure before closing?
I’m not trying to nickel-and-dime the lender if the structure is solid. I just want to make sure the lender is not using the seller credits and DPA to make the cash-to-close look good while unnecessary fees get buried in the loan.
The goal is not cash back. The goal is low monthly payment, low cash to close, legal credit usage, and a loan structure that is stable enough for my family long term.
What would you negotiate first, and what would you ask the loan officer in writing?