We have the opportunity to buy a home that is worth $265K for $235K because we know the owners and they really need to get out of their house because of a job transfer. We don't have a down payment, this just sort of fell into our lap right now. We want to know if we can use the equity this house is coming with, as our down payment. Hope this makes sense! :-)
2006-08-31 17:48:46 · 7 answers · asked by Amanda 2 in Business & Finance ➔ Renting & Real Estate
I've never heard of such thing, but it IS possible to buy a house with no money down. You should sit down with your banker and discuss all the options. Be careful though, the valuation of the house is starting to fluctuate wildly. It may be worth that much now, but if the market starts to really turn corners, then you may not be as lucky as you think....
2006-08-31 17:55:39 · answer #1 · answered by tkquestion 7 · 0⤊ 0⤋
The only way to use the equity legally would be as a gift of equity from the seller but that does not mean you will not have to put 5% down. Most programs require the buyer to put 5% down if there is a gift of equity. You may qualify for 100% financing which would do away with the down payment and have the seller pay 6% towards closing cost's which based on the loan amount should cover all of the fee's. Having the seller pay you under the table or outside of closing causes numerous issues the first being that the seller will be showing that as income if the rebate it back to you after closing. Also most lenders do not like to do what is considered a non-arms length transaction because of the ideas that people like Carlton Sheets have come up with. His programs are based on this type of transaction which skirts certain legal issues and requires all parties involved to be in agreement with each other. My suggestion would be to try and get financed at 100% and if that cannot be accomplished buy it by land contract and pay the mortgage holder direct. There are numerous steps involved in the land contract so if you need further assistance you can contact me at (614) 985-3771 or email cbrown@structuredmortgageltd.com I have been in the mortgage industry for 13yrs and have helped people such as yourself get financed.
2006-09-01 11:55:47 · answer #2 · answered by c b 1 · 0⤊ 0⤋
I think I understand what you wish that getting a loan of $235K on a house that is $265K, which means an equity of $30K. Correct?
The price tag of $265K may no longer to be true since housing market is going through correction. In addition, different appraiser will come up with different number on a same house.
Good luck!
** If you don't know the owner too well, ask for more discount. Because housing market continues to slump and winter is coming. Summer is usually the selling season.
If the owner is a friend, then don't. :P
http://money.cnn.com/2006/08/15/real_estate/Metro_home_prices_fall/index.htm
http://money.cnn.com/2006/08/24/news/economy/newhomes/index.htm
2006-09-01 03:14:36 · answer #3 · answered by Price is what you pay for value. 3 · 0⤊ 0⤋
No, you can't. Your lender will base the loan on sales price or appraisal, whichever is lower.
Your lender will have to source the down payment funds so the seller giving them to you will not work. As far as Carlton Sheets, he makes his money selling his program to consumers. Keep that in mind.
If the lender approves you can receive a gift of equity from the seller. Usually only acceptable in a family purchase. Sales price would be 265K and the 30K difference would be your equity gifted from the seller. This is not done very often and normally involves family members on both sides of the transaction.
2006-09-01 06:30:55 · answer #4 · answered by Karen R 3 · 0⤊ 0⤋
yep. I don't know how to do it but, Carlton Sheets no money down program talks about this strategy. You have found one of life's little secrets. Have the current owner pull the equity of the house by getting a loan to refinance it then hand the money over to you to use to put down. It is called leverage but, the part that I don't know is how to exactly how to do and the legalities of it.
2006-09-01 00:55:27 · answer #5 · answered by tqhelms11 2 · 0⤊ 0⤋
It can be done if you make a deal with the seller. Check with a lawyer to find out how to do it legally in your state.
2006-09-01 01:03:55 · answer #6 · answered by blackfangz 4 · 0⤊ 0⤋
i don't know what state are you from, but legally sellers can contribute up to 6% for closing costs . if they give you the money under the table which is possible, because you know them let's say $ 25000 your purchase price will be higher-$260000 . you decide what is better for you.
2006-09-01 01:12:38 · answer #7 · answered by bianca 4 · 0⤊ 0⤋