Financing these deals
When using a hard money lender, how long does it usually take for foreclosure and pre-foreclosure deals to close. I know that you can do shorter escrows with regular homes for sale, but when using a hard money lender, if they can get you the money in say 7-9 days, can you be in the house within 15 days? When you do buy a home at say 65% below FMV, and your loan is for 75% of the FMV, I have heard that you can use the difference to pay for repairs on the home. My question is, does the money go into a special account where I can only use it for the house, or do I just get a check for the difference to do with it how I see fit? Thanks for your time!
scoobydoo7513,
You can close a preforeclosure deal in a few days if you know what you are doing. Some HML (Hard Money Lenders) can have the money for you in as little as 72 hours, but you have to decide if you are willing to pay the high points and interest rates.
You usually have to have the seller "credit back" the difference so that you can do the repairs. You will get a check from the title company doing the closing after all expenses are paid. You can get the seller to "credit" it back to you if you have the clause in the contract or addendum.
Tanya
Thanks Tanya-
I am confused though, why does the seller have to credit me back? If the purchase price is $100,000 and the loan is for $125,000, why wouldn't I just get the $25,000 back? Or would I?
Sorry to be a pain, but I am confused.
Thanks again!
Teri
When the closing agent sends the settlement statement to the lender to review, then they will see that the purchase price is and may question why they are shelling out $25,000 more than the purchase price. Some investors will create a financing proposal that outlines the what you plan to do with the property to the lender. It will have estimates of repairs, showing it needs $X in repairs. So when you have the seller "credit back" the $X to you, then you can justify the need for the $25,000 credit. I hope this makes a little more sense.
Tanya