Posted by IZZY on August 06, 2003 at 14:50:00:
I read the article. I have even bookmarked it. Henceforth I will periodically refer to it to remind myself that as sweet as sugar is, too much of it can cause diabetes.
Regarding the warning in paragraph 3 of your response. Say no more. A word is enough for the wise. I have filed that away in my head.
But regarding the scenario in your paragraph 2, is it possible you can demonstrate how to structure a deal so the seller will pay closing costs ? You can use whatever numbers that will work with your example. I just need to get an idea of how such a thing can be structured. I am looking for structure.
HOW TO STRUCTURE FINANCING - Posted by IZZY
Posted by IZZY on August 05, 2003 at 15:43:07:
Someone please help with this,
I am looking at a property
SELLER IS ASKING: $812,500.00
80% LTV MORTGAGE $650,000.00
SELLER WILL CARRY $162,500.00
I HAVE 3 MONTHS RESERVES WHICH MORTGAGE COMPANY NEEDS
But here is my problem:
How much in closing cost should I expect ?
I do not have the money for the closing cost, is there any way I can structure the deal so the seller can pay the closing cost ?
What if we increase the sale price to $900,000.00, so I can obtain an 80% LTV loan for $720,000. Is there any way I can agree with seller to the origial price ($812,500, not $900,000)and the seller can then give me the difference between the $650,000 and the $720,000 so I can use that difference for the closing cost.
What if we increase the sale price to $900,000.00, so I can obtain an 80% LTV loan for $720,000., But waht if we include in the cotract that I will be entitled to $70,000 credit for repairs this amount I can then use for closing costs.
Someone please give me ideas. Thank you
Re: HOW TO STRUCTURE FINANCING - Posted by ray@lcorn
Posted by ray@lcorn on August 06, 2003 at 08:26:28:
First, read my article about overleveraged deals… the direct URL is http://www.creonline.com/articles/art-203.html
To answer your questions:
Closing costs will vary greatly depending on lender requirements. An average is probably 1% of the total price.
Yes, you could structure the deal for the seller to pay closing costs, but given the numbers on this one it isn’t likely.
If your thought is to increase the price to make it appear you have funds in the deal to the lender without the lender’s knowledge, then you’re committing fraud. The second scheme is also fraudulent. Basically, if all the parties to the deal are not made aware of the entire transaction, then it is likely that someone is being defrauded.
Stop looking for cheap shortcuts. Learn how to structure deals on the up and up.