One question we frequently get asked is “Can I Get Cash Back at the Closing Table?”. It’s usually a FAQ that we get late in the process and by then if the answer is NO, it can be too late to do anything about it.
Once Upon A Time…four or five years ago when the litmus test for getting a loan consisted of breath fogging a mirror…all kinds of creative things happened with your house loan. No down payment was very common and it wasn’t unusual for the closing attorney to disburse money after settlement to the seller’s lender, the seller themselves, the attorney, the real estate agents and … wait for it … the buyer! Times have changed, haven’t they?
Here’s a bizarre and weird concept, lenders don’t want you purchasing a home if you are going to need them to make change at the closing table. What’s up with that? (If I knew how to make a tongue in cheek smiley face, I would). Here’s the well guarded secret … houses can be expensive to keep up with and maybe, just maybe if you don’t have the wherewithal to maintain a house - it might not be in your best interest NOR that of the lender to purchase a house … yet.
Why do REALTORS keep pushing you to talk with lenders? It isn’t just about IF or HOW MUCH you are qualified for, the really great loan originators are going to find out if you have enough ready cash to do things like cover your moving expenses and to make upgrades or repairs if necessary to your new home. Although, truth be told…buyers should have a good grasp of this already. Along with the American Dream of owning your own house comes the responsibility of maintaining your precious investment.
If you don’t feel you have enough cash on hand to take care of more than simple repairs, looking at houses advertised as needing TLC or TO LEARN CONSTRUCTION really aren’t for you. Talk to your lender.
USDA is a great program and useful to first time homebuyers and people who are capable of making the payments but might not have the 20% down to get into their first homes. BUT, you need to know when you go through repair negotiations and the seller agrees to credit you for repairs, it may come in the form of a price reduction not ready cash. Ask the lender early on what their policies are likely to be.
So, the answer to the buyer’s FAQ “Can I Get Cash Back at the Closing Table?” can run the gamut from a flat out NO to maybe. Talk to your lender and to your REALTOR about your financial concerns above and beyond that of the purchase price. No one wants to spend time and energy on looking for a house that might turn out to be an inappropriate fit. Everyone on your real estate process team is interested in one thing only…a successful and beneficial transaction for all parties.