Ways to get 100% financing while buying low LTV - Posted by Pritam Sinha
Posted by Pritam Sinha on July 15, 2003 at 01:04:17:
One big problem is that lenders base the amount lent on the purchase price or appraised value whichever is lower.
One way I have found is to set the purchase price and let the seller pay back the buyer unofficially AFTER the closing. This however causes undue tax disadvantage for the seller (he officially sells at the higher price) and will only work if the buyer has a lot of trust in the seller that he will get the money back.
One way I have found to circumvent that is making the seller agree to artificially increase the price to appraised value and then have a company (controlled by the buyer) or a friend put a lien on the property for the difference. When the sale closes, the title company cuts a check to the lienholder for the lien amount which is the difference between the purchase price and the appraised value. This works well, except for the fact that the seller needs to really trust the buyer to allow him to put a lien on the property before the purchase.
Any other ideas to circumevent the above requirement by most lenders? The goal is to get a low LTV loan (say 80%), yet do the deal nothing down or with cashback at closing, when the purchase price is far below than appraised value.
I think this will be a very important topic for this forum. I am sure a lot of people face this dilemma.