What do people know about cash back mortgages

I am not talking the scams you see where banks are defrauded...

There are a lot of condos being dumped for 25-40% below their last legit bank appraisal. A lot of these will appraise for more than the sale price (Seller either can't meet ARM increasing mortgage or thinks the downfall will continue.)

Anyways, if I buy a place recently appraised at $500,000 for $325,000, can I mortgage it at once and get cash back or am i better off just putting 20% down, mortgaging it and then refinancing to get cash out?

Thanks in advance...

Sean

sean1 said:

I am not talking the scams you see where banks are defrauded...

There are a lot of condos being dumped for 25-40% below their last legit bank appraisal. A lot of these will appraise for more than the sale price (Seller either can't meet ARM increasing mortgage or thinks the downfall will continue.)

Anyways, if I buy a place recently appraised at $500,000 for $325,000, can I mortgage it at once and get cash back or am i better off just putting 20% down, mortgaging it and then refinancing to get cash out?

Thanks in advance...

Sean

Click to expand...

There was a thread on something similar to this recently. I think Iceman started it about rehabbing places and taking the money out quickly. Might want to look at that.

However, generally speaking, under traditional mortgages (not rehab loans) you can only borrow based on the purchase price and will have to wait for seasoning to occur (usually one year from purchase) before the bank will recognize appreciation in a house and loan based on that appreciation or increased FMV.

Again, generally.

fhmesq44 is one sharp dude when it comes to real estate...one of the more valuable posters on this site.

Getting cash back at close is all in all, ILLEGAL.

if your dealing with a developer who is building new condos, there ia a way by means of an ammendment that they can get you some cash back.

If you do a search on cash back at close, you will see it is illegal. If you disclose it, the bank will surely cancel the loan. If it gets to the underwriters and they allow it, once the bank reviews everything, there is a clause that they can call the note due immediately or they foreclose and possibly take legal action.

Cash back at close is a big reason why the housing market is the way it is right now.

I am doing a deal right now in FL, where the condo is 145k, I get back 32k at close from the developer, all legit through ReMax. I am negative about 300-500 a month after having a rentor in there. I can use the 32k in cash to further other business ventures or to use in other real estate transactions. If you dont need the cash back, you could possibly break even with a rentor and let them pay for it.