Is This Possible To Get Money At Closing?!?
I am looking at this property that needs some work. ARV is about $65,000-$70,000. It would probably appraise for $50,000 right now. Can I get a mortgage for, say, 90% of the appraised value - $45,000? If I put this under contract for $30,000 - can I get that extra $15,000 in my pocket to take care of the repairs on this place?
Is this feasible?
If not, how can I go about getting this cash for the fix-up?
Thank you,
[addsig]
As a general rule a lender will not be happy to make a loan where you put cash in your pocket. They will approve a loan that includes some funds for repairs. The funds are normally capped at something like 6% (varies by lender) and will be held in escrow until the work is complete. If you do the work yourself they will not pay for your labor.
There are loan programs that will take into account both the present value and the future value plus the cost of repairs. From the numbers the lender will stage a loan so you might be able to go as high as 125% of purchase price with the remainder of the funds above the purchase price being earmarked for repairs (again, held in escrow).
John
PS. It has been known to happen that folks get cash in their pocket. Even legally some of the time. Not very common and very much approaching the limits of what is legal. If you correctly declare the purchase price then it is a little hard to get cash back in your pocket.
[addsig]
Thank you John...
I am not looking for money in my pocket - I am absolutely looking for money for a little fix-up!
So this is possible! I appreciate the quick response!
[addsig]
Check with a local bank regarding a construction loan. The rate will be slightly higher and they are unlikely to loan 100% of both acquisition and construction (norm is 90% acquisition 75% of construction) and they will probaby want the renovation funds escrowed until the work is completed.