First point: why would you be “inflating” the purchase price of the house to the appraised value??? Don’t know about you, but when I sell my price is already pushing the envelop…it certainly isn’t BELOW appraised value where I need to inflate it! My worry is whether the house is going to appraise at my price…always!
Second point: I don’t ever forgive seconds. Never done it even once. I work hard on collecting them…every dime.
But your idea is an old technique…what it boils down to is lender fraud. It’s done…but I wouldn’t advise it. There’s too many loan programs out there now that make it pretty easy to get your buyer in if he has even a few redeeming factors. If the guy has some credit problems, and has 0 cash…just go on to the next guy. If he has OK credit, he can already do 100% financing. If he has some credit issues, so maybe he needs 5% down…you can probably pay his closing costs for him. If your price was high to begin with, you’ll have the cash.
i have house that willing to do some creative fiancing on,but i need my payoff know. i owe 32000 i have put 4000 of my own money in the house,the property apparise at 50000 what kind of fiancing can i do, that will meet my goals and help motoviate a buyer?
One the possibilities out there right now is 100% financing for owner-occupants with decent credit, and you could pay some of their closing costs. Appeals to the buyer with decent credit but little cash. For those that don’t have quite the credit, you could offer to carry as much as 10% in a second, get 5% down, and pay their closing costs. Allows you to deal with people with some credit difficulties. Obviously the first way get you most of your equity. The second way gets your loan paid off, gets your $4K back, puts some additional cash in your pocket, and gives you a second mortgage to collect an income stream on.
You might want to contact Ed for information on some of the possible programs.
Just an Idea here. Can you inflate the purchase price of the home, take that difference in the form of the second (as long as the first and second are less than the appraised value of the property), then forgive the second after the fisrst mortgage has been closed?