Anyone Ever Heard Of Adjusting Purchase Price To Cover Downpayment
Had a broker this morning tell me that since there was room between the asking price and the appraised value, we could adjust the price to cover the downpayment.
1. Is this legal?
2. How does this play out at closing? Does the seller give the buyer a check for the difference(downpayment) and the buyer writes a check, or does it just balance out during settlement.
Fraud, I would guess.
A co-worker of mine does the same thing. After appraisal, he gets a mortgage for appraisal, which is more than asking. He then gives the difference as the down payment.
Fortunately, the only person getting "hurt" by this is himself. He buys and holds for rentals.
But, after reading more from this site and others, I gather that this is fraud.
eric
I was under the assumption that some lenders allowed seller contributions.
Most lenders will not allow you to finance your downpayment. They look for seasoned funds. Additionally if you do not disclose this money on the HUD statement, it is fraud.
[addsig]
Some sellers use charitable organizations to do this. Basically the seller gives the money to the organization at closing and the organization gives it back in the form of down payment assist . They charge a fee for the service of www.course.Nehemiah is one and amerdream is the other. JIm[ Edited by campocanty on Date 01/21/2004 ]
I believe the seller is allowed to give 3% of the selling price to the buyer for closing costs. I have done this and it was fully disclosed and it was on the sales contract. I adjusted my sale prices up by the amount of money I was giving the sellers.
Brenda
I have used this for people that I resell to, because most people dont have the down payment .They can afford the little bit more each month. I give them the 5%to 10 % for the down payment as a gift. I all way work the gift back into the deal
.Some morgage consultant dont let you use this.
Happy investing, Missy