Purchase At Close
Ok I have heard that Cash at Close is illegal. What about if you promise to buy something from them at close that equals their down payment. Like their run down old trailor or an old car. Or even more extreme like one of their paper clips etc... for thousands of dollars?
bump
Cash at close refers to the real estate transaction. If you give them money for personal property or services performed, it has nothing to do with the real estate.
Brenda
Would they just have to trust me that I would buy their paper clip for $8,500 so they could then pay their downpayment. How exactly is the timing worked out of when I get my money and they pay the bank the down payment. I mean who gets what first? Or does the bank hand them the full amount and the buyer hands me the money and then pays the bank the down payment? I guess you can tell im a newbie.
For what you are suggesting, You could do a bridge loan that the seller pays off at closing
Lori
[addsig]
whats a bridge loan?
There is not enough information to make a suggestion. Bridge loan - for what??? You don't even know what they are trying to do!
If you are buying a home from the seller, why would there be a limitation for how much cash seller gets at closing??? Is it a short sale, and the bank is putting that limitation in place?
I agree with Brenda, buying a paper clip for whatever amount has nothing to do with the real estate transaction. That's considered a sales concession, and most banks won't let you do it.
If you are the one trying to get cash back at closing from the seller, thats pretty hard to do. What I have seen work in the past is have the seller contribute to a licensed contractor money for carpet replacement, kitchen upgrade, etc. Other then that, it will be tough.
On the other hand, if you are selling a home to someone who doesn't have a downpayment, while their bank requires it, ask them if they are going FHA. Under FHA guidelines, the seller can "gift" the money to a charity, the charity then "gifts" the money to the borrower to use for downpayment purposes.
Hope this helps, but I think you need to provide a little bit more info to get a specific response.
Vasiliy[ Edited by vasiliy on Date 04/19/2004 ]
The seller buying a paper clip for any amount of money would still have to be shown as income to the seller and the paper clip an "EXPENSE"?
A bridge loan is a completely legal item on any real estate transaction and is not fraud. In my area we have many HML's that are private investors that will lend the buyer money for the close. At the close the seller pays off the "bridge loan" for the buyer.
This is a completely legal transaction that works for both buyer and seller. it does take experience to be able to use this type of transaction to your advantage.
Lori
[addsig]