Is This Possible Or Do People Already Do This?
I want to buy a income home can I.........
Tell the people that im buying the home from to sell for like 30,000 over and give me back that 30 thousand after they sell it to me so I will have reserves just incase I dont get my rent money.
If you are getting a loan, all monies for the purchase and sale must be fully disclosed on the settlement statement at closing. The lender will not allow you to get any cash from the sale. If you try to hide the money from the lender you are committing loan fraud.
Thank about it. The lender is giving you money to purchase a house. The house is their collateral. That is why the interest rates are low ... because they haev collateral. They are not giving you an unsecured personal loan so that you can do whatever you want with the money.
Brenda
Most lenders have restrictions on how much a seller can give to the transaction. In most cases, it's 3% of the sales price to be used towards closing costs and pre-paid items. You cannot use seller concessions for reserves. The maximum you can walk away with from a deal is your earnest money.
Someone told me once that the only way to do that is to have a side agreement (under the table) with the seller. You would have a written agreement with the seller that they owe you $30,000 at closing. The guy went on to explain that the day of closing, the seller needs to call the title company and direct them to cut two checks- 1 made out to the seller and 1 made out to you for your $30,000. He said you would later call the title company to verify that the seller has instructed this and that there is a check there for you for $30,000. If the seller changed his mind at the last minute, you could sue him in court for the $30,000 since you would have a legally binding contract with the seller in your written side agreement. Your fraudulent agreement with your lender (that there are no side agreements) would have no bearing on your court case against the renegging seller.
I've never done this. I asked this mortgage broker how people got cash back at closing and this was his explanation.
However, it is loan fraud and if your lender found out, you would be in some kind of trouble. If the seller didn't honor your side agreement, you would have the trouble of suing him while you made payments on the additional $30,000 you never received. The seller would be required to pay capital gains on the additional $30,000 he gave to you so how would you compensate the seller for that?- it would cost you between $5,000 and $13,000 to pay the seller's capital gains tax out of that $30,000.
It's a bad idea.
Or, why dont you consult this website.
http://www.creative-financing-solutions.com/grantmoney.html
These are a type of grant for downpayments. Check it out. :-D
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