No Closing Costs, No Down Payment?
I will soon be needing to sell a condo and a house, and unfortunately these are the first pieces of property I've ever sold. The house is a rehab, and the condo is my personal residence that I am moving out of.
I'm selling by owner, and I was trying to figure out a way to offer my buyer no down payment and no closing costs. I have 2 lenders that do lots of 80/20 loans, so I have the no down payment covered. But, I know that usually the seller can only contribute up to 2% of the purchase price to cover closing costs, or at least with the lenders I've bought with. Is this the usual case?
When I find an interested buyer, I was going to ask for a 1-2% deposit to sign the contract. That would then go into the contract as a deposit that has been given to me. I would then sign a note with them, lending them the entire amount of their depsit back to them. Then, at closing, my 2% contribution plus their "deposit" would cover all the closing costs, and when its all over with, I would consider the note paid in full.
Will this work? Is this a good idea? Is there a better way?
Thanks.
There are all types of lenders available. Here are the most common forms of seller allowances:
1) 3%
2) 6%
3) unlimited seller credit
4) unlimited gift funds
The type of allowances depend on what the buyer is qualifed for. MD has all four types available. You should first find out what type of finacing the buyer is getting, THEN the type of consession is determined.
If the credit needs to be more, talk to the buyer or buyer's lender or broker. Most types of financing are interchangeable. The only difference is the rate.
Lori
[addsig]