Financing Question

does it mean if you pull off the mortgage application and pay cash, the owner will lower the price by 300~400k?

Just out of curiosity what would motivate a seller to want to close by the year end? Is this practical at this stage?

better yet, who cares? if he doesn't close, let him raise the price. good luck with that.

Don't know if practical. No board approval, so contract and mortgage are the only gating items - or so I am told, I am not an expert. Not sure what the motivation is, but was communicated very clearly.

Caonima, no. Body language was $50-100K discount if we close by year-end. We can't pay cash, but we can put well over 50% down, get a conforming mortgage (which I understand is much quicker)... but don't want to, because we don't want to have that much $$ tied up in this apartment. Of that 50%+ downpayment, I would want for $300-400K to just be temporary to get to closing and to come out a few months later. Trying to figure out of that's possible, and how.

Need more details on property to properly advise. While 2 weeks is possible, allot depends on the property type and details of the building. Holidays make it tough as well. Careful with the purchase then refinance as there are cash out fees, rate differences, max allowable cash out, and issues with length of ownership or seasoning. If you'd like to speak more let me know. Happy to discuss

Talk to a mortgage broker, whom you could give full financial picture. Look up recommendations in this forum. It is very unlikely that you'd be able to close by the end of the year - even if you get a commitment & appraisal within a week - you'll need to schedule the closing, which attorneys might not be willing to do before they get the commitment and so on. Good luck. Also, if you are a new buyer, rushing into a deal might not be to your advantage - tread carefully.

is this a co-op, do you currently own (and this this really going to be owner occupied), how many units in the building/how many sold? How is your credit and income?

Has an attorney already done due diligence on the building? If not, plan on that taking the remainder of the coming week. You can't sign a contract until that is done. You can't get far in a mortgage until you have a contract. That takes you to next week. Week after that is Christmas and unlikely to be a closing that week. So you have one week to get the mortgage and schedule a closing. This is not realistic in my view. Talk to a mortgage broker TOMORROW if you are to have any chance at all. Also, TOMORROW, finalize terms of the sales price with the seller and the exact terms of the deal. You basically have no time to waste even a day if you are going forward with this. The seller's attorney has to generate a contract that your attorney needs to review also. This sounds kind of crazy to me. Not the way to do a multi $100,000 deal.

Looks like the price is approx. 1.5 mil+? 50-100k (3-6%)is not worth you rushing into this.

Whether you need board approval or not, you might well need the building's lawyer to be at your closing, and the chances of that happening after December 23rd are nil. So you would need a mortgage broker you can pay to rush this through, and if you're not in contract yet... close to impossible.

If you still want to try and thread the needle, KW is right -- tomorrow you need to get an accepted offer, and have the seller's agent send over a deal sheet and an offering plan to your atty. Simultaneously, you need to line up a mortgage broker who says they can crash a loan in two weeks.

I think you would have to overpay so much on the loan side to make that happen that it will cancel out any discount you get on the pricing side, but I've seen stranger things happen. GL!

ali r.
DG Neary Realty

Mortgage Broker here. I close loans with Wells Fargo. Got a memo from Wells on Friday saying that they will issue a loan commitment for a purchase in four business days. If you want, email me the address of the building, and I can find out from Wells if it's on their approved list.

Ellen Silverman
E.S. Funding Co.
Www.esfunding.instantlender.com
Esfundingco@aol.com

Thanks for everyone's comments. It's possible we could have a handshake by Tuesday, but generally speaking I agree with everyone that we should not foolishly rush.

Back to the original question, though. If we put too much of a downpayment down, are there any options in the near term of getting some of that money out?

Don't assume you'll be able to do a cash-out refinance soon after you purchase. If you are able to do it, it will likely not be a conforming loan and your interest rate will be much higher. While banks may loan you 75-80% on a normal mortgage or refinance, a cash-out refinance often has much lower LTV limits.

Smells fishy. I personally would not do it without vetting the motivation.

Another consideration: I believe only the first $100K of a cash-out refi is tax deductible, which is what you're talking about. Can someone confirm?

Nada you are correct. If you buy a house for 1.5M and put down 500k then take out 1M home equity (not that a lender would let you) only the first 100k of the home equity payment is tax deductible.

Now if you bought at 1.5M and put 500k down and took out a home equity loan for 100k you would get your 100k tax deductible as above and the 1M deductible = 1.1M interest deduction

AARRRGGHHH don't read my calculations - I am not even going to correct it - just ignore them please

I agree with you Nada - its 100k - but I wont use calculations