Cash in Pocket Deal - what would mortgage company do?
If I found a home appraised at $225,000 and the owner would sell it for $200,000 (under market value). Can I take out the mortage for $225, have the title company pay the owner $200, pay my expenses and then pocket the remainer?
I understand the lender will know the actual sale price from the title company. Therefore, my question is, what will the lender do? Will the ask me to pay them the $25,000 extra or will they just let me keep the difference, since that is the value of the property.
I was told by some that I could alsp get this money in the form of a rebate from the buyer, but am not sure how to go about this.
Also I don't want the whole deal to be canceled by the lender.
Any advise would be greatly appreciated and please email it to me directly at:
w@more-fun.com.">w@more-fun.com.
THANKS!
P.S. does anyone know a mortgage company that will work with me in this fashion?
Traditional lenders will do their LTV analysis based on the lesser of the purchase price or appraisal amount. Hence, even if you got the property $25K below FMV the bank will look at the contract price for purposes of determining how much they would lend (95%, 90%, etc). Generally they will also limit how much the seller will pay for closing costs.
Hope this helps.
Talk to enough lenders and you'll find one that will go off the appraised value.
You may also look for one that will do a 100% no seasoning refi and that will do the same thing for you.
If you get a loan for $225K, that $ will go to the seller unless you specify that it is going in your pocket.
Full disclosure of what you're doing will prevent loan fraud. As long as the lender knows what you're doing and say's ok, then it's not fraudulent. Put an addendum that says "seller will pay the buyer the difference between $200K and the amount loaned by Corp. X for concessions and capital improvements."
BTW, the beauty of these posts is that everyone can read the replies, therefore I'm not going to email this to you. Sorry.
Thank you for these replies! I thought it is a matter of shopping around enough and I like your advise about being upfront. I hear people do deals all the time where a seller gives you a rebate once it's cleared from escrow, but then if the property ever goes into forecloser, it could all get revealed and that's illegal.
The next question is obviously, DOES ANYONE KNOW A COMPANY that will finance based on the appraised value???
THANKS!!!!!!!!!