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It violates federal law to get cash back under the table like that. The law is the Real Estate Settlement Procedures Act or RESPA.
The interest rates for the 203k rehab loans are still really good. I've done several this year and it is a great loan product. It isn't a loan on top of another loan. It is just one loan insured by FHA. It takes about 60 days to close them and work just needs to begin within 30 days. The types of things you are wanting to do are totally inline with the program.
True story from this year. My last rehab loan clients. I negotiated a great deal on a property for them. The property appraised 16% higher than our contract price as-is. They were maxing out the loan so doing $35k in remodel work. With the remodel work the property appraised for 46% higher than our contract price. If you play your cards right, you can get yourself into a nice equity situation.
I will take a look into this again.. from my experience FHA have crazy closing costs.. The house is very livable as is.. I was just hoping to get the work done and move in under one loan with cheap closing and a great interest rate... right now there a few conventional options for me where I am looking at 3.6%/30 and $2500 in closing with a mortgage company or 4%/30 and $125 for closing at a local bank Just looking to cut some corners I guess
I will take a look into this again.. from my experience FHA have crazy closing costs.. The house is very livable as is.. I was just hoping to get the work done and move in under one loan with cheap closing and a great interest rate... right now there a few conventional options for me where I am looking at 3.6%/30 and $2500 in closing with a mortgage company or 4%/30 and $125 for closing at a local bank Just looking to cut some corners I guess
Talk to your lender about the chances of a HELOC after closing. If there is that much equity, it may be possible.
Rates are great there, too.
that way you have some cash left over from the purchase to do the improvemnts you want. And you're not committing fraud.
Like I mention before FHA closing costs are stupid.. I guess if I was looking at MAJOR rehab it would be somthing I would consider but not spending 20-25k..
Right now at a local bank I am looking at 5% down and and 3.8% for 30 years... and oh did I mention the closing costs are only $125.. With such a cheap closing I can get the seller to pay closing costs toward my PMI in one lump sum..
Not to make the whole OP moot but I actually have the cash to do the work.. I am just trying to get as much as I can from the bank.. and was toying around with ideas of how I can do that.. cleary there is not LEGAL way to accomplish this and is it really worth the risk to try and do something Illegal... Probably not.. But in either case these interest rates are really good..
Like I mention before FHA closing costs are stupid.. I guess if I was looking at MAJOR rehab it would be somthing I would consider but not spending 20-25k..
Right now at a local bank I am looking at 5% down and and 3.8% for 30 years... and oh did I mention the closing costs are only $125.. With such a cheap closing I can get the seller to pay closing costs toward my PMI in one lump sum..
Not to make the whole OP moot but I actually have the cash to do the work.. I am just trying to get as much as I can from the bank.. and was toying around with ideas of how I can do that.. cleary there is not LEGAL way to accomplish this and is it really worth the risk to try and do something Illegal... Probably not.. But in either case these interest rates are really good..
So this lending institution is charging you $125 which includes the appraisal, daily interest for each day you are in possession of the property prior to the end of the month you close in, your credit report with 3 bureaus, flood certification, title search fees, lender's and owner's title insurance, recording charges at the local registry, and state of Maine transfer tax (based on the selling price of the property)? Call me a bit skeptical, but nobody gives away money and stays in business very long. You are paying for that somewhere.
So this lending institution is charging you $125 which includes the appraisal, daily interest for each day you are in possession of the property prior to the end of the month you close in, your credit report with 3 bureaus, flood certification, title search fees, lender's and owner's title insurance, recording charges at the local registry, and state of Maine transfer tax (based on the selling price of the property)? Call me a bit skeptical, but nobody gives away money and stays in business very long. You are paying for that somewhere.
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