How Do I Make The Downpayment Appear ...
I spoke with an well respected and seasoned investor friend the other day very breifly, he was telling me that in some instances you can inflate the sells price, as long as the value will allow it, to give the seller there sales price and show room for a downpayment. I understand the numbers very well. What I don't understand is how do you handle the downpayment at closing? How will the lender stipulate the downpayment? How will the title company handle this? In other words how do you pull off a deal like this.
Original asking 70K, value is 100K. If the sales price was changed to 100K with 80% LTC first and 10% down to give the seller there 70K ?
I know it's being done, just don't know how.
That is a very good question, however, I think it would be better suited in the beginners forum. I wish I knew the answer too because I am in a similar situation.
Good luck,
Jim
If the seller is willing to give you a portion of the sell proceeds at closing then this could account for your downpayment.
Many lenders have a limit (%) to what the seller can give as concessions. I've seen it often at 3% and 5%.
Who gets the downpayment?
Seems like I remember reading somewhere (not here) that inflating the sales price and pocketing the difference between what the seller gets and what the loan is for is illegal. Just my two cents.
I dont know if it is illegal or not but it is done alot. What you are going to have to do is really have to show the down payment even though you wont be giving it. Or you need a really friendly attorney who will disregard it and take it out of sellers proceeds but the lender may ask to see the check as a stipulation which doesnt happen often. Get someone to loan it to you for a verification of deposit for 24 hrs if you can if you dont have it. Either way it will be accounted for.
Making a Living is K-REKT!!!
ALL:
Just because something is done alo (e.i. selling drugs, prostitution, gambling etc.) DOES NOT MAKE IT LEGAL!!!
This is Class A Grade A US BANK FRAUD!
Minimum 3-7 Years if convicted.
And because FRAUD has NO STATUTE of LIMITATIONS you along with the plentious others 'oeverlooked' by lenders could become ensnared within the FEDS HANDCUFFS after an off-hand AUDIT.
WATCH IT and if you do wish to proceed with deal strustures like these...
Inform your ATTY that you and the seller have an agreement and need the ATTY to work it out with the TITLE Co. to show evidence of your downpaymt.
Better to let your ATTY and the Title Co take the risk and that all parties in the transaction are aware.
But BE CAREFUL youy actions are NOT colored as LYING TO, DEFRAUDING, a nd/or MISLEADING a FEDERALLY INSURED LENDER!
Hope this Helps!!!
Derrick