Cash at closing??

Found a home (for my personal residence) on tax roll at $174,000 w/ 1st lien of $141,000 and 2nd at $17,000. Home was recently appraised by 2nd lienholder at 166,000.
To prevent foreclosure homeowners & 1st lienholder have agreed, via listing agent, to a short sale at $148,000 with 2nd lienholder agreeing to release his lien for $2,000.
I need to spend about $18,000 (at my costs) on house to bring it up to a value of about $185,000 but I can only borrow $148,000 (sales price). How can I increase my loan amount to $166,000?
Can the present homeowner grant me a voluntary lien (based upon their promissory note to me or ?) that places me in a 3rd position, which raises to the 2nd position after the $18,000 lien releases? Then the $18,000 will pay the lien off at closing.
Will the title company and/or new lender investigate the liens and their origin or just verify that they are valid, recorded liens and verify that they are released upon payment at closing?
How do the real estate “gurus” walk away from the closing table with money?
All ideas appreciated!

Howdy JdJackson:

Some of the methods used by the gurus are actually fraud against the lenders. What they do not know wont hurt them attitude has kind of changed recently.

Most of the deals I have done involved the lended providing the repair funds in escrow to be repaired after closing, or even getting the repairs done before the closing and paying the bills at the closing. I did one once where the price was raised and the seller gave the buyer a repair allowance of $10,000. I do not believe the money was actually used on the property but it was approved by the lender.

Your sellers lenders will be watching carefully especially sinse they are taking a loss on the deal.

Another option is to get a second mortgage home improvement after the sale if you can not get a larger first mortage.

I would not mess around with third liens and newly created notes to the seller. All this looks decietful and probably will be fraud.

I’m very new at this, but would a ‘Title 1’ loan be helpful in this situation?..after purchase of course.

Howdy Greg2:

Once you own your homestead in Texas you can only refinance 80 % of the appraised value and pull out cash. There are rules too about how often you can do this. With a purchase loan you can find 100 % loans so the time to do creative financing is at the purchase.

Check out thislink on Title 1 loans.

Basically it is a FHA home improvement loan, max of $25,000-not to exceed 100% of the appraised value.

This link is from a New Jersey bank, but I’ll bet they are available in the [Great State of] Texas.