Hi, I was in real estate years ago and I always used to get cash back at closing for "repairs, carpet, etc." Its seems like the lenders today dont allow this to happen anymore. Does anyone have a formula, strategy, or way to still get money back at closing for whatever reason? Now I already know about the up to 3% for closing, but I used to do that too. I want to know a way to get the 3% for closing and money back for repairs or anything else. Thanks.
2006-11-28 18:13:28 · 5 answers · asked by j_issa 1 in Business & Finance ➔ Renting & Real Estate
Hello Everyone, Thank you for the responses so far, they have been great!
2006-11-29 06:37:19 · update #1
FNMA and most other investors have revised their guidelines. You cannot get cash back on a purchase transaction- legally.
You can only walk away with cash on a refinance.
If you are buying a home and the seller is offering $3000 for new carpet, AND they are already paying the limit of your closing costs, the lender will reduce the sales price by $3,000. If the seller is NOT already paying your closing costs, then most professionals call the $3000 a "closing cost credit"
The person who says this will change is incorrect. Lenders are getting more, not less, strict, due to all the mortgage fraud that goes on. And getting cash back on a real estate purchase is considered motgage fraud.
2006-11-29 05:55:06 · answer #1 · answered by jenay672001 3 · 1⤊ 0⤋
Jenay is correct. Lenders are not allowing this kind of practice anymore - and they never should have!
If what you want is money for the repairs on the house you're buying, there are ways to do that. Loans can be structured so you get money to buy, and money to fix up, all in the same loan. HUD has an FHA 203k loan just for this. The house has to appraise now, for at least the purchase price, and there needs to be an "As Repaired Value" appraisal also. The repaired value must be at least as much as the total of the loan.
Note that you don't get this cash at closing. It is held in escrow, by the title company or the mortgage company. As the requested repairs are done, that contractor gets paid. If you do the repairs yourself, they'll pay you back for the material costs (won't pay the homeowner a labor fee). If there's money left over, it gets applied toward the principal of the loan.
If you really want to buy and repair, this will work for you. If you're looking for money to go to the Bahamas with..... sorry.
2006-11-29 06:13:59 · answer #2 · answered by teran_realtor 7 · 0⤊ 0⤋
Careful money expenditures have been on the rise for over two years. The person above that you wrote about must have had rocks instead of euros on the brain.
2016-03-13 00:27:40 · answer #3 · answered by ? 4 · 0⤊ 0⤋
It just has not been that kind of market lately. As we shift more toward a buyers amrket that will change I'm sure.
2006-11-29 01:55:40 · answer #4 · answered by Anonymous · 0⤊ 0⤋
After you find out, go to www.savingthousandsininterest.com and pay your home off quickly!
2006-11-28 18:40:24 · answer #5 · answered by Anonymous · 0⤊ 1⤋