100% Financing Is Easy But What About The Closing Costs?
If anyone can throw out some ideas it would be greatly appreciated.
I am running into a streak of many motivated sellers in the NJ/PA area. They are willing to carry as much as 30% of the sales price through a 2nd and I'll bring the 70- 80% through my mortgage company. But how do I get around the closing costs. This is a big hit out of pocket, so how does this become a "true no money down deal".
I can structure many deals in the next 90 days that will become very profitable, but this is also my 1st time out there and the costs look like a big hurdle to close the deal and I am losing wind in my sail quickly. Please get back to me, thanks so much! 
Pay the owners $3000 more than you are thinking originally and have them pay for the closing costs. Basically wrapping them into the loan.
I am doing deals here with some homes at 65% LTV, yet I can finance up to 90% the LTV IF I WANTED TO and cash out.
If they will carry 30% could you finance 75% or 80% and cover the costs?
The answer before mine makes more sense financially, I'm just throwing some ideas out.
JB
[addsig]
Here are three ways to do it:
1. Offer more, and have the seller credit that extra amount in sales price back to you on the closing statement to cover costs.
2. If your lender doesn't like this because some 100% loans require a certain % contributed by buyer (3% for Fannie and Freddie towards the "transaction), then here is the way around it:
Raise the price again to cover the costs, and in a separate agreement to the purchase agreement, write that the seller is to remit back to buyer x dollars out of seller's proceeds.
This won't appear on the closing statement, but after the transaction closes and the title company is cutting the seller their proceeds, they'll deduct what comes to you and pay it directly to you.
In this way you must still come up with costs at closing but you get it back just after closing.
3. Have your lender overcharge you on origination points double the amount of your true closing costs. You come up with the money at closing, but your lender gives you a check back for the amount of the overcharge. (This assumes the lender is making their money on the yield spread premium).
Can you use this same technique on a multi-family (40+ unit) apartment building to get the closing costs ??
What about the down payment? can you do the same with that?
thanks !
Yes, you can do it on multifamily as well. The difference is that I don't know of any commercial financing at 100% LTV or 100% CLTV.
The above post is really a residential post, and I believe the responses were to a residential scenario.
As for closing costs, most commercial bank and non-bank lenders permit 3% seller contributions to costs, and I've placed some loans where 6% is permitted.
But at the same time, things can be a little more creative. For example, of course it is easy to raise the sales price (if the property appraises) so that the seller covers some costs.
But if the lender has a % limit on seller contributions, then in commercial I as the mortgage broker can also have a signed fee agreement with the seller directly.
Therefore, seller pays 3% closing costs for buyer and seller pays a fee directly to me.
We meet the lender guideline, and I as broker end up paying some of the closing costs directly.
Local banks that hold their own mortgage paper and underwrite in-house will definitely do 100% commercial. I am closing on one next week, where I am actually getting cash back at closing. 75% LTV on the bank's mortgage, 25% on a seller second, and an 8K seller credit PLUS the security deposits, etc... will give me approx 5K at settlement.
Not to mention, I don't have the highest credit score around.... approx 628.... and it still got done. It is possible.
Good luck to you!