Improving your credit score

[STR8UP]

Originally posted by Page
If I understand the situation correctly, you can arrange to have cash paid back to you from the seller when you buy property. A lot of buyers never think of asking, but if the seller wants the deal to go through badly enough he will probably be willing to accept any reasonable requests for cash you will make.

It doesn't even matter if the seller is motivated, he/she just needs to be flexible and reasonable.

It is of absolutely no consequence to them whatsoever.....the contract shows you paying him an extra 3% and he pays you an identical amount. By doing this it is fairly easy to get a TRUE zero down loan on a primary residence and reduce your downpayment on an investment. Getting cash back requires you to get the seller to agree to additional terms and you have to trust them a bit, but in my case I hapen to be good friends with my RE agent and so is the seller, so I have it easy.

 

[STR8UP]

Originally posted by ethnomethodologist
Wow, I just keep thinking about this... are any of you that replied any good at all with women?

Can we all cut the semantics, and speak the same language. Preferably women, so I can understand, and hopefully speak to you in a language you aren't so smooth with?

I bet you have a really big penis too, huh?

 

[ethnomethodologist]

Originally posted by STR8UP
I bet you have a really big penis too, huh?

Yes my "two inches of manhood" are screaming for money, MONEY, MONEY, MONEY!

You proved me wron,g you can speak the language, now how about being REALLY nice and stop talking big words to impress us, we're already impressed. We will fight to learn, you have to fight to teach us. Where is the middle ground, perhaps Docs can show us where the middle of the spectrum lies?

 

[al77]

Originally posted by ethnomethodologist
What I don't understand, if I am doing the math wrong, please correct me, is why are you GIVING THE BANK SO MUCH MONEY? $540k from a 216k loan at the low range of the score, and $460k from the same loan at the high end of that list. Actually, just one step up over each of the pivot points, you pay $10 grand more after all the years between a rating of 759 and 760. If I had 10 grand, I could triple it in ONE month, no joke. I'm thinking I need a business partner, I am so glad this money talk finally didn't piss me off.

Dude, you can triple 10k? You must be a millionaire already.

Look, the loan is $216k, the loan plus the interest over 30years is $540k. I.e. you pay $540-216=324k only in interests.
I am sure it should be no different in Canada.

Why is it happening? Because people got brainswahsed "You have to have a house no matter what!", so they are willing to overlook what they actually have to pay. They don't care about that huge interest, they want to be as others, i.e. to have a nice home in the burbs. It is so cool (LOL), it is so cool to be in teh slavery for the bank for 30 years...
But well - it is how it works. It is just .. right, crazy.

 

[ethnomethodologist]

"Imagine how much money you would have in your own pocket, if you could learn to repay what you loan youself!"

Is that what your trying to say, I hope so, I have a lousy credit. I'm not even going to say admit to how bad it really is, I would lose respect pretty fast if I did. I am on subsistence pay, and I am next to broke in terms of cash on hand. That should sum it up, with nobody to trust for money in the future, I became miserable in life, and started drinking it away, literally, giving friends drinks, **** I KNOW better than this, but my stupid ass doesn't know better, than not to keep fooling myself.

It is no differnt any where in the world, they ask you ifd you want to borrow the money, and you say yes, it is our own fault.

I would be a millionaire, if I stopped putting my money where my mouth is, literally. I would have had more time, less problems. I might even be happier, but I am happy supporting friends habits, as well as my own, of my current salary, I have two years of living money, in outstanding loan to friends. I've had entrepreneurs, "self" made millionaires, and credit corporation consultants stop me in my tracks, and ask me how my life was going, and why I am not excited about my goals anymore. I was too **** faced to think about what they asked me, so I was rude, to make them not ask again. I used to wake up the next day, and stick my money back in my mouth, and drown myself in alcohol, to make the pain of the hangover and suffering useless, again. Next time I talk to them, if I don't learn my lesson, will do the same thing again. I hate myself, why am I too weak to learn?

 

[Docs]

I don't understand how the numbers add up. Orginally, it was 30k. You said the price went up for the house, so when all is said and done, he paid you 35K total, to cover closing and the price increase?

Starting fresh again, how do you get your down payment back, screw it. Can you explain everything in a newbie sense, and including the minimal funds we normally have?

 

[backbreaker]

http://www.creditboards.com
http://www.creditnet.com/
http://www.debtorboards.com/
http://artofcredit.com/

you will find everything you need in the first one.

 

[STR8UP]

Originally posted by Docs
I don't understand how the numbers add up. Orginally, it was 30k. You said the price went up for the house, so when all is said and done, he paid you 35K total, to cover closing and the price increase?

Starting fresh again, how do you get your down payment back, screw it. Can you explain everything in a newbie sense, and including the minimal funds we normally have?

Okay, lets try this again in more detail.


I got 100% financing, which means that the bank will finance 100% of the deal, minus closing costs. The closing costs would have to be paid out of my pocket, but I was able to get the seller to bump up the purchase price and refund it back to me so the closing costs would effectively get wrapped into the loan.

The purchase price got bumped up by $16,600, but the actual closing costs only came to $11,500. So the seller would have an overage of $5,000 which he cuts back to me outside of closing.

 

[al77]

Originally posted by STR8UP
Okay, lets try this again in more detail.

I got 100% financing, which means that the bank will finance 100% of the deal, minus closing costs. The closing costs would have to be paid out of my pocket, but I was able to get the seller to bump up the purchase price and refund it back to me so the closing costs would effectively get wrapped into the loan.

The purchase price got bumped up by $16,600, but the actual closing costs only came to $11,500. So the seller would have an overage of $5,000 which he cuts back to me outside of closing.

Closing cost $11,500 is supposed to be paid by you to a lender who is not the seller.
The seller will get $16,600 more (from you again).
Why would the seller need to give you the difference, i.e. $5000?

It sounds quite uncanny. He may give you $5k, yes, but the price you pay is increased by the same $5. You still will have to pay that $5 at some point of time, right?

 

[Docs]

Ok, I understand now. But why would the seller sell himself 5K short? Or is that smart talking?

Nextly, I know that the bank supplies money, did the seller pay you the cost of the house? If so, he was basically paying you to take his house? :S.

 

[STR8UP]

Originally posted by al77
Closing cost $11,500 is supposed to be paid by you to a lender who is not the seller.
The seller will get $16,600 more (from you again).
Why would the seller need to give you the difference, i.e. $5000?

The seller is giving me the difference because he came out with an overage. He got $5k more than he should have.

It sounds quite uncanny. He may give you $5k, yes, but the price you pay is increased by the same $5. You still will have to pay that $5 at some point of time, right?

Repeat after me....

THIS IS A LOAN!

You are BORROWING an extra $5k that will have to be paid back. Money doesn't come from nowhere, so if the seller is to come out even, the money is coming from......you got it....the bank! You are simply writing the paperwork to roll the closing costs into the loan and since the closing costs were less than the 3% that you wrote into the contract (the max the bank will allow) the seller will have to receive an extra $5k extra at closing, which you have to ensure he pays you for. This will make him even up. He got his entire agreed upon selling price. You simply borrowed "too much money" from the bank.

The only reason it has to go down THIS way is because the bank will not allow the buyer to walk away from the table with excess cash. That is why the seller has to give it back to you. And like I said, you have to have a separate agreement with the seller for this. Check your local laws before taking anything I say as the word though....you need to be aware of what you can and can't do when getting creative with money.

Technically this could be considered a breach of your loan with the bank, but generally if you keep paying them they are happy. ALWAYS make sure you pay your bills.

 

[STR8UP]

Originally posted by Docs
Ok, I understand now. But why would the seller sell himself 5K short? Or is that smart talking?

Nextly, I know that the bank supplies money, did the seller pay you the cost of the house? If so, he was basically paying you to take his house? :S.

The seller ends up with exactly what you had initially agreed upon. The $5k was simply the excess of the 3% minus the actual closing costs, which the bank will not allow you to take directly from the closing.

Remember, this will only work with a 100% loan and if the property appraises for at least 3% over what you paid for it. The closing costs also have to be less than 3% for you to get a refund, and you have to make separate arrangements with the seller to get this money back.

Lets say the closing costs actually came out to be exactly 3% of the price. That would mean that you would be even up at closing. You would get back whatever earnest money you had initially given the seller, but no more or less. If your actual closing costs turn out to be MORE that 3%, it would be taken out of your earnest money and you would be refunded the difference.

Follow me?

 

[ethnomethodologist]

Okay STR8UP let's play pretend. Let's pretend, we were under the IMPRESSION, that you made FIVE THOUSAND dollars off of buying that house, for lending the seller that money. We were NOT AWARE, that you simply wrote that 3% onto the loan just because you wanted to BORROW 3% more.

I am not in favour of BORROWING money, I am in favour of MAKING money.

This thread STARTED as a way to increase your credit score, by INCREASING the number of POTENTIAL credit sources.

Thank you for letting me think this out with some anger, I understand that you did just that.

 

[Docs]

Oh, so you just got the apprised value, which you would have gotten if you owned it before.

Yes, I was under the same impression that you walked away with 5K. What I'd like to know is if I take out a loan (or used credit), what are the best things to put that money to so when the profit is achieved, when the loan/credit gets paid back, I come out ahead?

 

[Nocturnal]

My credit card allows me to withdraw cash from an ATM, up to about 20% of my credit limit, kind of like a small short term loan. Would it help my credit rating in the long run to withdraw that money, hold it for a few weeks, then pay the balance and repeat?

 

[STR8UP]

Originally posted by Nocturnal
My credit card allows me to withdraw cash from an ATM, up to about 20% of my credit limit, kind of like a small short term loan. Would it help my credit rating in the long run to withdraw that money, hold it for a few weeks, then pay the balance and repeat?

You will probably get hit with huge fees that way.

If you want to build your credit you are better off using the card for daily expenses and paying it back at a decent pace.

 

[STR8UP]

Originally posted by Docs
Oh, so you just got the apprised value, which you would have gotten if you owned it before.

Yes, I was under the same impression that you walked away with 5K. What I'd like to know is if I take out a loan (or used credit), what are the best things to put that money to so when the profit is achieved, when the loan/credit gets paid back, I come out ahead?

I did (will) walk away with $5k. But it isn't free or found money....it is money that is borrowed from the bank over and above what I paid for the property.

It is all a big number shuffle. I could show you on paper but it's almost impossible to write it in paragraph form. Even if I did write it on paper it would take most people a LONG time to get it if they aren't used to seeing real estate closing documents.

 

[prosemont]

Originally posted by STR8UP
I did (will) walk away with $5k. But it isn't free or found money....it is money that is borrowed from the bank over and above what I paid for the property.

It is all a big number shuffle. I could show you on paper but it's almost impossible to write it in paragraph form. Even if I did write it on paper it would take most people a LONG time to get it if they aren't used to seeing real estate closing documents.

Questions:

1. Most standard closing packages have statements under oath to the lender that there is no other agreement by and between seller and buyer. I assume you simply answer negative on this one. (Remember the savings and loans scandals and resulting lender collapses? Can you say "bank fraud?" People went to jail for this sort of thing and it completely changed the banking industry since. The resulting regs were put into place to prevent what you are doing because it affects LTV ratios, which is why banks do not allow cash out to Buyer. Ie. the 5k (while a wash) is simply being financed -- ie. the loan is that much larger and hence the lender's LTV ratio is higher. I also assume the appraisal still covers.

2. Customarily, the deed gets recorded and loan funded simultaneously. As a practical matter, how and when do you get the $5k check from seller (after the closing and the deed is recorded and loan funded?) What would you do if the seller gave you a rubber check or balked? What recourse do you have since you cannot file suit against the seller without also admitting your own bank fraud?

FYI: You have some fine ideas and I'm not against this per se, I'm just wondering how you handle these issues in reality.

 

[STR8UP]

Originally posted by prosemont
Questions:

1. Most standard closing packages have statements under oath to the lender that there is no other agreement by and between seller and buyer. I assume you simply answer negative on this one. (Remember the savings and loans scandals and resulting lender collapses? Can you say "bank fraud?" People went to jail for this sort of thing and it completely changed the banking industry since. The resulting regs were put into place to prevent what you are doing because it affects LTV ratios, which is why banks do not allow cash out to Buyer. Ie. the 5k (while a wash) is simply being financed -- ie. the loan is that much larger and hence the lender's LTV ratio is higher. I also assume the appraisal still covers.

2. Customarily, the deed gets recorded and loan funded simultaneously. As a practical matter, how and when do you get the $5k check from seller (after the closing and the deed is recorded and loan funded?) What would you do if the seller gave you a rubber check or balked? What recourse do you have since you cannot file suit against the seller without also admitting your own bank fraud?

FYI: You have some fine ideas and I'm not against this per se, I'm just wondering how you handle these issues in reality.

Like I said, you have to do your own research as to whether or not you can do this. In my situation the $5k is less than 1% of the loan amount and I wasn't expecting for it to go down this way, it is simply an overage that the lender won't allow to come back to me at closing. The only way this really happened is that my agent knows the seller well so we can make it happen on a handshake. If the closing costs were $5k higher, the bank or the mortgage broker would have gotten this amount. The appraisal came in WAY over the amount I am borrowing so the lender has little risk as far as LTV goes.

As far as the risk of getting the money from the seller....well, this is an unusual situation in that I have pretty good asssurance that his word is good. A mutual trust kind of thing. If this were someone I didn't know or had no control over I would have to come up with a creative solution to ensuring the money gets to me or forget about taking it out altogether. Besides, $5k is a paltry sum to be chasing around. Now the $150k that I am trying to get back from a bad business deal......that's a big bite that's tough to chew.

 

[ethnomethodologist]

Originally posted by STR8UP
Besides, $5k is a paltry sum to be chasing around.

Said the thief... I agree with Porsement on his FYI, great ideas, but how do you deal in reality. This stuff is definitely cheating, that's not how I roll.