Equity At Closing
We are getting a loan for $72,000 to purchase a home. The seller is asking $54,500. At closing, how is the money disbursed. Can the title company do a third party disbursement for the extra $17,500? Do the sellers receive the extra $17,500? Can we state where we want the money to go on the escrow disbursement sheet?
I do not think that lenders will lend more than the purchase price unless it is a rehab or construction type loan.
Brenda
From your question, do we infer that you have a purchase contract for $54500? If so, then are you really getting a loan for $72000 are are you just pre-approved for a loan up to $72000?
Banks don't usually loan more than the contract amount. Maybe a little more detail behind your question will help clarify the situation.
If we just take your question at face value and address the proposition that you have obtained 130% financing, then any amount left over at closing belongs to you. It is your loan, so you walk away from the settlement table with cash in your pocket.
Of course, if you have obtained a purchase and improvement loan because the property needs some major rehab, then the extra funds will most likely be escrowed with the settlement attorney and disbursed directly to your contractors to pay the rehab bills. When all the rehab is done and all the bills are paid, any money left in the escrow account will be given to you.