how do i get cash back on a mortgage loan?

Question

im in the process of purchasing a house with no money down and i need to know if it is possible to get cash back when the house in bank owned.

Answer 1

Not any more. Mortgage loans for more than the purchase price of the property are as scarce as feathers on a pig. You can look around, but my guess is that your search will be fruitless.

Answer 2

The idea behind "cash back" is that the property you're buying is appraised at more than you're paying for it. If a house is appraised at 100K and you pay 60K for it, many banks used to be willing to give you a mortgage for 80K (80% of the appraised value). Since you only had to pay 60K to the seller, the other 20K was yours to do with as you pleased. Many times people did this in order to make improvements on the house they were buying (new wiring or plumbing, siding, insulation, new kitchen, etc).
Because of the recent problems with mortgages (foreclosures, delinquencies, etc) many banks will not loan more than the amount of the sale and may require a substantial down payment as well, because many homes are overpriced and the bank doesn't want to wind up with a home worth less than what it is owed.
There are many real estate "businesses" that make money in exactly this way, but as the value of houses falls and banks tighten their lending criteria, fewer and fewer people will be able to make a living by buying low and pocketing the difference between the sale price and the appraisal value.

Answer 3

There are some banks that will do rehab loans. I used to work as a loan officer, and that loan never went smoothly. There were always problems with the appraisals. You have to put together all your bids from contractors for work that will be done. They won't give you money for you to do work, or for your own use if that is what you are looking for. Your best bet is to buy the house, and then after a few months take an equity loan if you are getting a good deal and want some cash. Good luck.