Hello all,
I am looking for some ideas/ways that people have gotten cash back at closing in Texas. heres’s the situation. I might go through a bank for the loan, no brokers. I know in that respect my fees/rate will probably be lower, but they may have less programs for investors other than the standard 90% LTV. I have my realtors license, so I planned on using that as a partial way. But I’m looking to get at least $5-10K back at closing.
I’m buying a personal property next month and recieving a seller repair credit at closing ( am closing with Chase), but how would I use a combination of techniques to get more cash back.
What’s the purpose of the money? What’s the sales price, repairs needed, and after-repair value?
If you plan on pretending to get repair money back, but not performing them, you’re committing loan fraud. Most lenders have caught onto that game and require a repair escrow to pay the contractor only after the work has been completed. Worst, some require structural repairs to be completed before close.
The easiest way to get money back that may not send red flags is to simply ask the seller to contribute towards closing costs. Sales price may need to be increased to accommodate. This is not illegal and common practice. The caveat is that the property will need to appraise at the new price. My lenders can accept up to 6% seller contributions. Some (especially banks) limit it to 2 or 3%.
Close, perform repairs, then do a cashout refinance up to 90% on investments, 80% for owner-occupied. Investment mortgage brokers that we use don’t require title seasoning.
Get a second lien if there’s enough equity. Make sure it’s not a “silent” lien from the seller or other lender. Like the refinance, you can do the 2nd lien after closing.
Get with a good investor’s lender and tell them your goals so they can provide appropriate solutions.
the brokers that use banks or investment lender-types with no seasoning req’s - how much more in points do they charge? - i guess the max (under usary laws)…which would be what? like 4 or 5 points?
so up front you get banged, but you can continue getting loans and buying-fixing-dealing homes…
1 point. They’re not hard money lenders. They’re a brokerage dedicated to investors.
Two most recent deals (just wrote the contracts yesterday): We’re financing some fourplexes in Killeen. Fourplexes are $252k w/seller-paid closing costs, $2850/mo rents.
One client is at 8.5% APR, 95% LTV, 3% seller closing costs, 30 year loan.
Another must have better credit because he’s has an 80/20 (100% loan) 7.5% first, 9.99% second. Seller is paying 3% costs.
On a conventional loan the only money you can receive back at closing is money that you have already put into the deal. If you paid for your appraisal, or put down earnest money you can get that back, and that is only if you have a 103% loan and have financed that money, or if the seller pays it at closing and you get reimbursed. Other than that escrowing for repairs is the only way to get money at closing and that will be held by the title company.
Exactly. If Fountaininvestment wants to just save on costs, they can get the seller to pay some closing costs, which essentially puts money in your pocket, but it’s not “cash back”.
Thanks a lot guys. I was trying to use the money for reinvestments to buy more properties. Basically, it would down payment money. I am thinking about getting intosmall commercial (like 6-10 units bldgs and needed a way to get the 10% down.
What has been happening a lot is that buyers are getting cash back under the table from sellers after closing. Which is illegal. They use the funds to carry the note while trying to get the property rented. The problem is that they typically are paying an inflated value for the property and it can’t possibly cash flow. Check out this blog www.iamfacingforeclosure.com to see the consequences of what can happen with this type of transaction.