FAQ~Can I Get Cash Back at the Closing Table?

By
Real Estate Broker Owner with MoonDancer Realty, Dillsboro,NC NC# 218097
 

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 byFAQ 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.

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Rainmaker
612,958
Bob Miller
The Ruiz/Miller Team - Ocala's Dream Team
Keller Williams Cornerstone Realty

Hi Mona and we struggle getting seller to understand that we do not get lender clear to close sometimes until day before closing!

August 03, 2012 01:12 PM
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574,429
Mona Gersky
GRI,IMSD-Taking the mystery out of real estate.
MoonDancer Realty, Dillsboro,NC

First....let me say I am THRILLED to have so many mortgage people chiming in...than you sooooo much.

Gary...have at it, although I have to say that John Juarez's toilets, lights and ceilings is pretty darned clever.

Travis, I'm not necessarily opposed to a buyer getting cash back, just want them to be qualified to get it.  Unfortuntately, we can't always predict if a lender will allow this to happen and it is always best to discuss this with your lender first.

Rodney, thanks.  That simplifies it a bit.  The hard part is convincing the buyer.  That's why we're delighted when they end up with lenders like you.

George, I am going to include this post and these great comments like yours in the folder that I select from to send to new homebuyers.  Thanks for the link.  I might have trouble sleeping tonight, so it will come in handy.

Karen, yes ma'am...I agree.  I really like your new photo too.

Bob, the day BEFORE!!!  how about the day OF!

August 03, 2012 04:50 PM
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787,494
Bob Crane
Forestland Experts! 715-204-9663
Woodland Management Service

I have been lucky these past few years, when I tell my lender that we have an accepted offer the first 2 questions he asks are, how much are you buying it for, and how much over that will you be borrowing.  Of course he knows me well enough to know that I wouldn't borrow it if the house was not worth that amount and more.

August 03, 2012 05:37 PM
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Mona Gersky
GRI,IMSD-Taking the mystery out of real estate.
MoonDancer Realty, Dillsboro,NC

Hi Bob, it all boils down to open and honest conversations with the money lenders...especially nowadays.

August 03, 2012 06:41 PM
Rainmaker
1,163,175
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

If you want to close on an escrow don't rock the boat.  It is hard enough without game playing.

August 03, 2012 08:36 PM
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Mona Gersky

GRI,IMSD-Taking the mystery out of real estate.
Ask me...we'll figure it out!
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Additional Information

What job could possibly be better than bringing people together by sharing our common interests and learning new ones? Here's my opportunity to introduce conversations and photos of the area I feel so passionate about...the beautiful mountains of Western North Carolina. This is one way to give you some background about me and our MoonDancer Realty company to help you make an informed decision about hiring us as your next REALTOR. I hope you enjoy the content as much I enjoy sharing it. I'm looking forward to reading your comments and hope to meet you soon.