Finance Part of sale of house

[Patrick Liska]

Hello, was wondering if i could get some advice. I have a 2 family home that i purchased, 159,900, Tenants on one side for 20 years and the other side vacant. i put about 20,000 into sprucing and fixing up. With repairs, original closing costs and carrying costs at this point i am into the property for a total of about 35,000. original cost plus everything else totals about 195,000. i have listed the house for sale at 240,000, and have a buyer, and negotiated to 238,000 with 8,000 seller assist. The appraisal came back at $200,000, my realtor and the bank feel the appraisal isn't right but the underwriter for the loan won,t hear our arguments. The purchaser however still wants to buy the house. at the price we came too. this is an FHA loan he is getting, the bank will only loan up to the appraised value of 200,000, then minus the seller assist his loan with them will be 192,000. the problem arises here, i said i may finance the rest of the loan for 15 years, but i just found out today from my realtor, because she just found out from a friend at the bank, that i can not be on the closing papers as a second lien because it is a FHA loan, and i would have to have a loan agreement signed a week or so later for the 38,000 loan with me. I did tell my realtor i would want something in writing signed before closing to this agreement. does anyone have any advice on this ? will an agreement like this stand up in court ? what should i include ? is there any way to stay on the house after the initial closing, until our agreement is signed ?

i know that's a lot, but i was wondering if anyone had any advice.

[Darren Eady]

It is also illegal for you, the buyer and the realtor to have a deal outside of the FHA loan on your sale that the underwriter is unaware of. If you tell the underwriter that there is CLTV (combined loan-to-value) over 100%, they'll probably decline the loan. You would be better off getting another appraisal (if there are comparable sales you fell are better than what was used) or telling your buyer to start fresh with a new lender and a new appraisal.

The other option is if the buyer has a bunch of cash to pay you the difference outside of closing and you could still make the lender aware of the extra cash payment.