Question about cash back at closing

Hello all,

Someone please advise on this. We found a house that we want to use as our new personal home, primarily because the mortgage payment would not allow it to be used as a rental right at the moment. Asking price is $139,900 with an agent involved. My idea is this. Have the seller hold a second mortgtage to the tune of around $35,000 - $40,000. We can get a mortgage for $100,000. I’d like to figure out how to pocket that $35-40 K and use it for other investments. Is this possible. Can someone explain how I could do this. Thankyou.

I am not very experienced in this type of transaction but I think it will be very difficult. The banks will not finance the transaction unless they are in first position on the house and the sellers note would have to be second position. I doubt that a lender will take 3rd position over the appraissed price.


Your post is confusing. I’m just gonna take a stab at this.

Purchase price is 139.9K
Seller to hold or take back a second lien for 35K.
You have a mortgage for 100K.
How and the world are you gonna just “take” his second lien?

You have to give him a purchase price for 100K. Then do a cash-out refi or a HELOC down the road for the 35K since you would have equity in the property. Another way is to give him 139.9K with him taking back a forgiveable second lien for 35K. The seller would then just tear up the note instead of recording it with the county. I’m not a betting man but I bet he would not do this if this is a fair market deal. If the seller takes back a second lien then you are gonna pay X amount to the bank and X amount to the seller. If I’m way off base in my explanation forgive me as to what you are trying to do.


only way to really get cashback at close to have the seller agree to a higher purchase price and give cashback at the close in a form of credits, like repairs…

Of course the house has to appraise for the sale price.

For instance, i am starting rehabs now…Deal I am doing now…buying home for 440K, rehab is 50K and 6 months PI and insurance is about 30K, so we agreed to a sale price of 520K. At close the seller will give me a check back for 80K, which I will use to rehab home and carry. hopefully home is sold in 2-3months total. Plus I will take back my out of pocket expenses like insurance and money i placed in escrow…

Of course this works because the house in its current condition appraised for 530K,…The bank will 99.9% of the time use the less of the 2 figures, appraisal or sale price to determine funding. If the home only appraised for 500K, then I would have to do the sale for 500K and only get back 60K at close…