Cash back

Cash back

There seems to be a lot of mystique surrounding getting cash back at closing. And really there shouldn't be.

Getting cash back at closing merely means over-leveraging the property. (And when I say over-leveraging, I mean over th purchase price, not over FMV.)

A very simple example:

Buy a 100K property for 50K. Get a HML for 65% of LTV (65K). You just got 15K back at closing (less closing costs).

You can do different things involving seller carryback. Just make sure that any lender involved knows what is going on.

A couple more points about where the $$ are coming from:
It's NOT coming from the title company. They are just conduit.

It could come from the seller (but probably doesnt). That would mean the seller would have to bring cash to closing.

More than likely, it comes from some kind of lender. Could be institutional. Could be private.

I know someone who's standard deal was along these lines: Buy FSBO SFR at 85% of FMV, buyer pays all fees (no realtors involved). Private lender lends at 90% of FMV (NOT 90% of purchase price). Cash back on every deal.




Down Payment Assist.

By Marcie Geffner •
A countdown clock on a Web site operated by Nehemiah Corp. of America is ticking off the days, hours, minutes and seconds until a new government ban will terminate virtually all seller-funded down payment assistance programs in the United States. But the clock may be stopped, now that a bill has been introduced in Congress that would reverse the ban.
The clock will tick off its last second Oct. 1, the last day when homebuyers will be able to use seller-funded down payment assistance with any mortgage backed by the Federal Housing Administration, or FHA, a division of the U.S. Department of Housing and Urban Development, known as HUD.
The ban is part of the Housing and Economic Recovery Act of 2008, which President Bush signed into law July 30. The act states that a borrower's down payment for any loan backed by the FHA can't be provided before, during or after the sale by:
• The seller.
• Any other person or entity that financially benefits from the transaction.
• Any third party or entity that is reimbursed, directly or indirectly, by the seller or any other person or entity that financially benefits from the transaction.
An "entity that is reimbursed ... by the seller" clearly refers to seller-funded down payment assistance programs, which collect "donations" from home sellers and then "gift" those donations to buyers, who use the funds to purchase the seller's home. The seller also pays a fee, typically of several hundred dollars, to the organization.
More than 1 million buyers and sellers have utilized these programs, according to industry figures. The two largest organizations, Nehemiah in Sacramento, Calif., and AmeriDream in Gaithersburg, Md., have processed more than 300,000 and 250,000 transactions, respectively, according to company statements. Since 1999, AmeriDream alone has processed more than $26 million worth of the payments in chunks averaging about $3,600 per "gift." Numerous smaller down payment assistance organizations also operate throughout the United States. Both Nehemiah and AmeriDream also sponsor homebuyer counseling programs.
Nehemiah is still taking applications from buyers and accepting donations from sellers, according to CEO Scott Syphax. The housing recovery act specifies that seller-financed down payments can still be utilized as long as the borrower receives credit approval from the lender prior to Oct. 1.
Act now to tap seller-funded down payment
Homebuyers will have very few, if any, opportunities to buy a home without a down payment after the ban on seller-financed down payments becomes effective.


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Thank you for posting this article. Do you know, will it be possible to do ANY seller-concessions/seller-financing for properties we will have for sale AFTER Oct. 1st, or do you suggest putting a move on selling anything we plan to? At least getting it locked up by Oct. 1st.

Thank you,



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