Made $7K By Mistake…Anyone Heard of This? - Posted by Carmen
Posted by Carmen on April 26, 1999 at 21:25:34:
We just had our first closing today - kinda anticlimactic, since the house already has a tenant, nothing to “DO” with our “new house!”
But, we did make $7K by mistake, so it’s not too boring!
We were borrowing $42K on a home valued at $68K. The bank (it was a bank loan, 75% LTV max - nothing too creative, sorry) assured us several times that our loan was for $42K. We get to the closing, and Lo and Behold - the loan is for $50K because they had to add “Credit and Life” insurance polices to our loan - at the cost of $7K for both! We were flabbergasted, to say the least - until we found out that we could cancel these two policies in a couple of weeks, and get a check mailed to us from the insurance company! We closed anyway ($50K was still a good deal - no work to do in this house). Now, we think we’ll ask for insurance on purpose - this does NOT get computed into the 75% max LTV limit (go figure). We can get extra cash out!
We were just trying to borrow the minimum ($42K) to maximime monthly cashflow (rent is $750) - but we won’t fight it. That means we’ll get $7K out of this, plus $291 a month this year ($750-$459 PI) - we prepaid taxes and insurance for the year - and about $191 (including TI) for the next year or so until we sell for about $70K. And the best part was - we rolled all of our costs into the loan, and got a check back at closing for $95! NO MONEY OUT OF OUR POCKET!!!
Wow, this stuff really works. And we thought we couldn’t do it in South Florida…
PS - Our next closing is May 7…