money back

[dersmil]

hello all ,in a couple of days i'll be making an offer on two properties.What i need to know is if it is in anyway possible to get money back at closing?

[Arie]

Borrow more than you need to buy the property and keep the difference.

[dersmil]

that was my first idea but i was told by a couple of brokers that was illegal.

[Arie]

They said it was illegal because they make money on points and the lenders yield spread and that means less money to them.  lol

[JAAMJK]

Money back at closing can be a touchy issue depending on where the money is coming from.  For example:

If you put a $10K deposit down on a home that you then are able to acquire 100% financing and the closing costs you need to pay are only $8K then you might get refunded the other $2K. I do not believe this is illegal.

But, if you put $1000 deposit down on a home that you then are able to acquire 100% and the closing costs you need to pay are $8,000, then you have a problem if you get refunded $2000 at closing.  It would seem that your requirement is an additional $7000 and you walk with $2000 so there is $9000 of funds that are unaccountable at this closing.  I would have to believe something is happening on this transaction that is outside of the Real Estate Settlement Protection Act.

[Bluemoon06]

I bought a house that had an overfunded escrow.  I put in the offer paperwork that I would assume the escrow account and at closing the check was cut to me instead of the seller. ($4000)

[dersmil]

well in this situation i have 100% finance and $1000 deposit,one is a rehabed property the other has the owner living there and they both agree to pay closing cost,so am i being greedy?

[TonyDiCorpo]

find a broker that deals with investors, or a lender that does and tell them what u want to do.  if the property u r buying appraises for $100k and the purchase price is $70k, u can ask for lender approval to get the $30k back at closing.  it may have to be for rehabbing, most likely not cash in ur pocket.  some lenders want to put it in escrow though to, and allow draws for rehab.

[dersmil]

what about grants ,what is a tara grant.

[TonyDiCorpo]

i don't know of any grants for NOO

[christopher w]

Arie,

If what you are saying is true

"They said it was illegal because they make money on points and the lenders yield spread and that means less money to them. "

Then why would the lender not want the larger loan amount? This would mean more money in their pockets. Duh!

They are saying it is illegal because in some states it is illegal, and in most cases lenders will not allow it unless it comes in the form of a leaseback or something like that.

[mtnwizard]

It's not necessarily "frowned upon", its just plain against the law (bank fraud) and can put your young butt in the slammer!   My advice is: Do that...if you have a penchant for that sort of thing (i.e., helping Bubba out with a few of the chores).

[henryinma]

It depends what state he's in. Certain states may outlaw it, but in others it's legal. As I said earlier, it's all about disclosure. If it's in the P&S, it's legal. You need to get the right loan product that allows for cash back. I think some FHA loans only allow up to 6% cash back. You may end up paying a higher interest rate because a particular loan type doesn't allow for it so you get switched to something else that does.

Anyway, your problem may just be that the seller doesn't want to do it in which case this is all a moot point.

[christopher w]

Henry,

FHA allows 6% interested party contributions. FHA loans do NOT allow cash-back to the buyer on a purchase. On a cash-out maybe, but not on a purchase.

[millionaireshaun]

Borrowing more money than you need to purchase the home is not illegal. What is illegal is borrowing more than appraisal. Or paying someone to appraise it for more so you can get cash back at closing.