Can I discount the sale price to create a down payment?
August 27th, 2008 By Peter G. Miller
No.
Lenders provide financing on the basis of the sale price or the appraised value, whichever is less.
In the case of a “discounted” price, say selling a home worth $350,000 for $340,000, the sale price is $340,000. Lenders do not recognize a discount.
A better approach is to pay full market value but to make the transaction dependent on a “seller contribution” at closing. The effect is the same, but the accounting makes more sense to lenders.
Speak with brokers and lenders for details.
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