Ok, Can This Be Done, I Think So, But Not Sure...
Hello all,
Here is the situation, I am flipping selling a house and my buyer got apporived for 95% ltv, how do I go about taking back a second for the remaining 5%, and should I first get approval from the bank they are borrowing from? Also, I am paying for all closing costs and was wondering if I could pay for the closing out of my net proceeds, or do I have to come to the closing with cash. Their mortgage broker has agreed to take their fee on the back end. Thanks, Tim[ Edited by HasSpoken on Date 05/06/2004 ]
Ok, got the answers, it can be done. But, heres another, what if I have this house under contract, and I flip it. Can I take back a second for the remaning 5%? My hunch is that I can because I will be on chain on title if only for like 5 minutes. Thanks, Tim[ Edited by HasSpoken on Date 05/06/2004 ]
Be very careful here as the lender may recind the offer to finance if the second is not fully disclosed prior to closing
A good mortgage broke will have to pipe in here, but I don't think you can. When you flip the property you will have to convey free and clear title to the buyer. Maybe somebody has a creative way of accomplishing your goal, but any standard lender i know would not touch this.
Thanks Maw, I was thinking the same thing, I know the lender is countrywide, anyone have experience with them concerning taking a 2nd at close? John could you please explain your post ot me as if I'm a 3 year old? Thanks, Tim
I just re-read my post and I'm confused.
Are you wanting the new buyer to carry a second mortgage payable to you, or are you talking about you borrowing against the 5% equity from a bank.
thanks
John, I want to give the buyer a 2nd to cover the 5% and then forgive the loan at closing. Thanks, Tim
Has
Thanks, that makes sense. A lot of lenders require the borrower to sign a form saying they are not using any other loans.
Here's the skinny for you.
ONLY if the 1st position lender allows 100% CLTV (combined loan to value) can you take back a 2nd mortgage on the property. Likely, (and especially it being Countrywide) the lender will NOT allow a 2nd mortgage. They want the buyer to put some of their on money into the deal.
As far as you paying closing costs, they will come out of the net proceeds. Example: you buy for $75K and sell for $100K, agreeing to pay $5K in closing costs. You subtract $80K from $100K and get $20K in profit.
Where did they get loan approval from, a mortgage broker or direct from Countrywide? And where are you doing your closing?
Either of the above two people (loan officer or attorney/closing agent) should be able to easily answer your specific questions about this.
Roger