Please Help!! I need to get my numbers right. - Posted by Rick_(MD)

Posted by pud on May 07, 1999 at 18:18:14:

ask the seller for his interest in the equity for the purpose of obtaining the first mortgage(giving him/her a promisory note)to be transfered to a second after the closing of the first.lender may offer you more $,you could use this overage for closing cost as long as you keep 2nd mortgage amount the would be over financed.

Please Help!! I need to get my numbers right. - Posted by Rick_(MD)

Posted by Rick_(MD) on May 07, 1999 at 16:18:18:

I seem to be a little brain dead at the moment. Too much work and too little sleep.

Anyhow, here’s the deal:

Triplex appraised @ $90K 1 year ago. No appreciable increase in price over the last year.

Current loan is $67K.

I need to give the seller 5K in cash from this deal.

I have to show a 5% down payment and I have very little money in the bank. Lender will need 60 days of bank statements for the down payment. My collective accounts average 2K-4K. I need to be able to include settlement & closing costs in the new mortgage.

Lender will give a 70/30 note (100% financing allowed), but seller must hold a (?forgiveable?) second mortgage to cover the 30%.

Any constructive input would be greatly appreciated!

Re: Please Help!! I need to get my numbers right. - Posted by Rick_(MD)

Posted by Rick_(MD) on May 11, 1999 at 21:36:05:

Thanks all for your suggestions!

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
  • towards buyers
  • 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.

Good Luck!

Re: Please Help!! I need to get my numbers right. - Posted by mike

Posted by mike on May 08, 1999 at 11:37:36:

go to the curent lender and ask him to put in 5k for the seller. rewrite the loan. if you are short of (blank), go find it and put it into the deal. half a pie maybe be better than a lost deal twenty years from now.

Re: Please Help!! I need to get my numbers right. - Posted by pud

Posted by pud on May 07, 1999 at 22:15:50:

i tried to buy my mom’s house after my father passed on,neither of us had extra money so my freind at the bank suggested she turn her equity over to me and the bank would see it as a down payment plus equity for me.
my loving mother declined,wanting to cash out and move to florida. i rented elsware ,unfortunatly never finding out how it here i sit after chapter 7 posting a followup… in sunny florida! trying to jump on the realestate train after bankruptcy. if i only new then what i know now.( i was only 21 and now 27).

Lender - Posted by Sean

Posted by Sean on May 07, 1999 at 18:19:06:

If you have a lender that will do a 70 LTV and a 100 CLTV I’d like to know who it is and what the rates are.

If 100 percent financing is allowed then no down payment proof will be required. The only problem is 70 percent of 90,000 doesn’t pay off the first much less provide 5,000 cash for the seller.

Your best bet is to buy for $103,000 and get a first for 70 percent which will be $72,100. That will pay off the first and provide the $5,000 down. Then the seller will carry a second for the balance at 0 percent interest with payments of $171.67/month.

Don’t do a forgivable second. That’s double contracting and it’s fraudulant. It’s not required and you could get into a lot of trouble. Are you aware that the FIRREA law allows the federal government to sieze your property with no trial or even proof of guilt if they have probable cause to believe you lied on a loan application to get that property? This could be 5-10 years down the road. Don’t risk it.

Note that my plan won’t work if the first wants 15 percent interest or 10 points because you’ll have a negative cash flow.