Not as difficult as you might think. - Posted by Susan N.CA
Posted by Susan N.CA on May 08, 1999 at 22:05:11:
First off I don’t know if I should be responding to you. I’m just trying to get started investing for profit so I don’t have a lot of experience under my belt. I do however own two homes and have a trade history in accounting. Yes, I like number games.
First of all, If the bank is willing to allow 100% financing - Why the 5% down payment? I’ll assume that they’re willing to go with a 70/25. (FYI-Most banks will do a 80/15 without m.i.)
My suggestion to you is as follows:
Sales Price - $96,000
5% Down Payment - 4,800
70% First Mtge - 67,200
25% Second Mtge - 24,000
3% Seller Credit
closing costs - 2,880
This will pay off the first with an additional $200 to add to your down payment to give the seller a total of $5,000. The bank will probably not complain since your accounts have averaged 4k.
In California it’s pretty standard for sellers to extend credits to buyers to help with closing costs so I suggest going this route. Depending what your closing costs are, the scenario I have proposed may leave you cash poor. Just keep in mind that your first mortgage payment will not be due for 30-60 days.
Since you are essentially paying $3,120 over FMV have the seller compensate with a lower interest rate on the note.
Let me know if this helps with your dilemna.