Up To How Much Can I Get Back At Closing...
Is there a limit on how much I can get back at closing. I want to buy this property and I want to do some remodeling to it. The seller is willing to add the expenses on the selling price for me to get it with the loan. How should this be done? Thanks!
Good Day to you: Remember the bank will only loan a % of the Appraised value, not necessarily the selling price. You can work it that way as well as have the seller pay part of your closing costs. Most banks allow up to 5% of the sales price to be paid by the seller on your behalf. Couple those two things together and you might have enough to do your rehab. There are also lenders out there that will loan 2 loans. One for the purchase and one for the rehab. The second one is similar to a construction loann, where the bank gives you draws depending on the amt of work completed. There is also a HUD 203K which is designed for rehabs. Last resort, Hard Money Lenders.
Good luck and make $$$
Tom
First, there is no limit to the amount of money that you can get back at closing. This amount, if any, will be determined by your lender and will depend on the lender's polices.
Second, don't try to hide your needs by adding expenses to the sales price. This is fraud! Think of your lender as being on your team. Show him every part of your deal and your exact needs. A good lender will work hard to meet those needs.
Thanks for your help.
When you get cash back at closing and there is a traditional lender involved they will not normally release the cash to you 'at closing'. The lender will want a escrow set up where the repairs are funded after being completed. The lender will not pay for you time and labor but they will cover the labor costs of a contractor.
In summary, the lender wants to know the money went into the property.
They will also not be interested in repairs or improvements that do not improve the value of the property. Hence putting in a pool or something that might not help is unlikely to be a funded repair.
John
[addsig]
John,
I have been able to get money back at closing numerous times. In fact, at times when I have been in a cash flow bind I have bought property just to fix my cash flow needs.
However, this does not work for every deal or with every lender. I have had lenders who have made me document every dime and done inspections before they will let me draw funds.
I have found that most of the time, if I am realistic, I can find financing that fits my needs. Finding the deal is the hard part. Financing and everything else is secoundary.