Cash back at closing
My son is in the process of making an offer on a 159,000 triple. The seller is willing to take 141K before he lists it. My son wants to have the mortgage say 159k so he can get the 18k back at closing so that he can make upgrades to the units. Is this legal. How do you structure the purchase offer. Does the mortgage company have to know whats going on, how about the attorneys. Any pros out there who knows the answers. Thanks for your help.undefined
No, it's not legal. Anytime the lender is not completely informed of the FULL conditions of the purchase, it can be considered loan fraud. The attorney would have to know to be able to properly disperse the funds. Of course, if he knows that the lender doesn't have the full story, he probably won't close the deal either.
Some lenders will allow a certain % of the purchase price to be deducted for closing costs or repairs, though each bank usually has a limit to the amount.
What is the FMV of the house? Some lenders will loan against the appraised/tax value instead of purchase price (hard to find though. Need a good mortgage broker).
What ever you do, don't hide anything from the lender. While they probably wouldn't find out, if they do, it is SERIOUS bad times for you.
Roger