Real Estate and Home Mortgages - Confidentiality of finance details

I am a first-time buyer with some concerns about privacy during the closing process. Specifically, can the finance details of the transaction (e.g., the downpayment amount and the type of loan) be kept hidden from the seller and seller agent (and my own buyer agent)? It seems to me that the only parties that should have any need to know those details are the lending group and myself. But from the paperwork that I have seen, it seems that the downpayment amount, at least, will be spelled out for all parties to see. Also, would these details need to be revealed at some other time before closing?

I'd appreciate any insight from more experienced buyers (or sellers). Thanks!

I'm not sure which state you're in, but I doubt it. Every Purchase and Sales agreement that I've ever seen a Realtor use spells it out, and in some cases the type of loan can create different requirements as the process proceeds.

As a simple matter, if I'm the SELLER and a BUYER makes an offer to me that does NOT spell out the source of funds in some detail, I'm NOT going to take my house off the market. I want to know that I have a FIRM OFFER, from a SUBSTANTIAL CITIZEN, not some flake who's trying to put together some deal involving a FIRST, SECOND AND THIRD mortgages that bring their payment up to 55% of their pay. Without that info, I don't consider that I have a sale.

I've bought and sold over 100 houses and personally I don't care who knows (at least some) of the financing details.

Frank

Thanks for your reply, slumlordfrank. I am in Connecticut.

I agree that the seller needs to be confident that the buyer can obtain financing before they put effort into the process. However, that can be conveyed in the form of a pre-approval letter, right? If a buyer is scraping together cash and loans in unorthodox ways to make the purchase (and these might result in the final closing not going through), then, certainly, they should not expect as much privacy in the transaction. But in cases such as mine, where a buyer intends to put down considerably more than 20%, I don't see why the seller/seller agent/buyer agent needs access to those financial specifics. Only my lawyer and my lender have a need to know. I must not be the only one who feels this way.

Also, shouldn't the "earnest money" (1%) serve as a firm offer?

if I was a seller and had a buyer putting 20% down I would have a lot of confidence in you as a buyer and would more than likely accept your offer over another buyer that was putting 5% down. A lot of our contracts state down payment as required by lender, so you may be able to use that. I would be proud of myself and state in the contract the 20%. Your other financial information such as the details of your credit report and your income is of course confidential.

To be honest, I've always felt that it was "odd" for the seller to stick around during the loan closing too. I go to my closings and unless there's a scheduling conflict, all parties are at the table together.

The seller WILL know some details of your financing no matter what based on the HUD1 settlement statement. It shows sales price, loan fees, your down payment and how much you financed. They have to review and approve of this and will get a copy.
However, at the same time, you also get into their business a bit: you'll see how much is owed on the house, how much commission is paid to the realtors and how much they net from the sale.

For the rest of the documents, I think you could request to go through the loan documents privately. I don't see how there could possibly be an issue with that. This would keep your financing details, including rate & APR, SOURCE of down payment (they'll have access to the amount, but not the source on the HUD1) and any pre-payment penalties from the eyes of the seller. However, know that if you sign all of that and then the seller comes in and finds an issue on the HUD1 fees, that many changes on the HUD1 will affect your APR (read: not your interest rate, APR is different) and that requires a NEW Truth In Lending be sent to the closing table for you to sign. SO, they may end up knowing some of your business anyway. They also can't get their check for the sale until you've finalized your loan, so they'll be sitting there, somewhere, the whole time waiting for you to finish up.

Cliff's Notes: you can keep most of it private at your request (and subject to scheduling with the closer and seller), but they WILL know certain details regardless just with normal disclosure.

IMO, it's none of the sellers business where your downpayment comes from, whether from savings or from a gift or local bond issue. It makes PERFECT sense for them to require a pre-approval letter before accepting your contract though. Beyond that, it's really none of their business.
Furthermore, I would not state in the contract how much I was going to put down. What if something catastrophic happens and I can't put that much down? Be careful what you put in writing, it could come back to bite you. If the seller has a problem with a pre-approval letter, then move on to another house. You might not want to buy from someone who sticks their nose too much into your business.

Not sure how things are in Connecticut and elsewhere, but in Illinois, leinholder information is public knowledge. If someone wants to know how much I put down on my house, it's simple arithmetic once the sales price has been reported.

His concern is privacy about the SOURCE of his funds. That's not a seller's business to know, nor anyone else. That does not get disclosed in any public manner. You can figure downpayment from reported sales price---IF it's reported, but you also have to check for any secondary financing to know this. Not all house sales are reported everywhere. Builder direct sales, for sale by owner's etc.