I am currently negotiating a deal and wanted to take some cash at closing to me some minor cosmetic repairs. Is this possible:-? Or is there another method I need to use?
It is possible. Due to spirit laws, you can now only borrow 80% of purchase price if you buy in a company name. If you are buying as an individual - risky - you can get up to 90% LTV on an investment property. So if you buy at more than a 15% discount, you should be able to take cash at closing.
If you cant get it at closing, you can also look in to lines of credit after closing.
How can buying at a discount enable you to take cash out on a purchase? I thought lenders always base their ltv on the "lesser of the appraised value or the purchase price". Is this not true? Are there lenders that do loans with ltv based solely on the appraised value, regardless of the purchase price?
The trick is finding the right lender. You can find lenders who will give you a loan based on the appraised value. If the purchase price is below say 80-85% (depending on what the lender is willing to do) the AV, you may be able to get cash back.
Some lenders will give cash back if the money is going to repairs. The lender can lend based on the estimated appraised value (the after repair value). They may require estimates of the repairs or actual bids from contractors.
One word of caution: Some lenders will insist the money go into in escrow account until the work is done. Find out the policy of your lender.
It is possible. Due to spirit laws, you can now only borrow 80% of purchase price if you buy in a company name. If you are buying as an individual - risky - you can get up to 90% LTV on an investment property. So if you buy at more than a 15% discount, you should be able to take cash at closing.
If you cant get it at closing, you can also look in to lines of credit after closing.
How can buying at a discount enable you to take cash out on a purchase? I thought lenders always base their ltv on the "lesser of the appraised value or the purchase price". Is this not true? Are there lenders that do loans with ltv based solely on the appraised value, regardless of the purchase price?
The trick is finding the right lender. You can find lenders who will give you a loan based on the appraised value. If the purchase price is below say 80-85% (depending on what the lender is willing to do) the AV, you may be able to get cash back.
Some lenders will give cash back if the money is going to repairs. The lender can lend based on the estimated appraised value (the after repair value). They may require estimates of the repairs or actual bids from contractors.
One word of caution: Some lenders will insist the money go into in escrow account until the work is done. Find out the policy of your lender.
Ron
rojung is right, it depends on the lender. There are 1000s of them out there, and some doloan off FMV.
Thanks very much guys.