Legal?
If a person finds a home that they are interested in, say for $100,000.00, but they can only get a loan for 80%, and needs to come up with the other 20% themselves for downpayment. Is it legal for the seller to put on the contract that the asking price is $120,000.00 so that the seller can get there asking price, and the buyer doesn't have any downpayment to come up with?
b1a2d:
NO it's NOT LEGAL!!!
Happy Investing,
Derrick :-D
Ok, no it is not legal...but who would get in trouble and how could you get caught? I know someone that did that and I was wondering about it.
it's not legal. they can increase the price but it doesn't matter the bank will base there loan on the appraised value. but hey, sometimes the appraiser takes the easy way out and appraises the prop. for the asking price.....kenmax
Most lenders will still want to see a down payment from you.
If the lender who makes the 1st mtg loan is being "kidded" in order to induce it to make the loan...it's illegal & fraud against that lender, and big time trouble for the parties to the fraud-the borrower and the seller.
HUD 1 form is universally used to apply for institutional loans, and it clearly states thereon that any mis-statements therein are fraudulent and liable for Federal criminal prosecution.
There have been a number of convictions about this very felony and there will be more.
[addsig]
What JM said. If you work in collusion with the Seller, that also would be conspiracy.
This is a big no-no as you have heard, but inplace of telling you how wrong it is lets come up w/ other solutions...
First of All keep everything on the table. Meaning if it is not on the HUD settlement statement probably not on the up and up.
Second sometimes the bank (1st position) will allow the seller to carry back the 20% if you cant get a 20% loan yourself.
OR another option if you can come up w/ some money the seller is aloud to contribute sometimes up to 6% of purchase price towards you bringing the amount you need to close a lot less.
Just a few thoughts, good luck.
-Sky