how do you get money in your pocket at closing?

i've heard of people getting big checks in their pocket at closing like $20,000 to $30,000. how does this work, or what conditions have to be met?
  • February 01 2011 - Cape Coral
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Answers (15)

Profile picture for SoCal Engr
On my last refi, I refi'd at .125% higher than par. The rebate (right word?) paid for all closing costs, 6 months of home insurance, and cash back. This was not a "cash out", just a case where the incentive for getting a higher-than-par rate made it worthwhile.

If you have sufficient equity, you can get a "cash out". However, that cash is rolled into your loan, so you'll end up with a higher amount of principal.
  • July 29 2011
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On a refinance, this is referred to as a "cash out refinance."  It is a common type of refinance.  However, you must have equity in your property in order to do this.  On a purchase, you can no longer walk away from the closing table with money as a buyer.  Hope this helps.
  • July 29 2011
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Profile picture for the_country_hick
The best way to do that is to go in with an extra check for that amount and not spend it.
  • February 01 2011
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When you complete a Cash Out Refinance, you receive however much cash you have specified to your lender.  You need to have equity in your property as well as meet other criteria set forth to do this. Your loan balance increases by the amount of cash you have requested. 

When you compelte a Rate/Term refinance, you simply modify the rate and term of your loan, but you are limited to $2,000 cash in hand.

When you complete a purchase, unless you are the seller, you will NEVER receive cash out.

Good Luck~ I hope this information is helpful~
  • February 01 2011
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maybe the people getting big checks are sellers with equity :)
  • February 01 2011
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About all I have gotten out of a closing was a couple of extra pens that i shoved my pockets and perhaps a free bottle of water.

Anything else is just pure fraud. Just google 'straw buyer' to get a sense of what kind of fraud this involved. Minnesota was number 5 in the country for lender / home buying fraud.
  • February 01 2011
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"This happened often during the boom"

WHAT!  I never saw it happen and any loan officer or realtor that was involved in a purchase transaction that thiss took place on should loose their license and be charged with bank fraud!  It was never an acceptable practice!
  • February 01 2011
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It may be hard to ask how that worked for them as their mail is limited while in prison.........If it was not a cash out refinance the only other way would be a verified earnest money deposit $20K - $30K more than the down payment (unheard of).
  • February 01 2011
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If your strictly talking about a cash-out refinance, generally the requirements can be more strict than a refinance that is done simply to lower your rate or monthly payment.  The total amounts taken, the percentage of the home's value consumed by the loan amount, and your credit scores are all determining factors.  If the property is located in a declining market you may also find additional limitations.  

My advice is to find a reputable professional in your area and talk it over with them.  Most professionals would be glad to do that for you for free.
  • February 01 2011
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kateyezi,

Are you asking about a refinance or a purchase?  There is no way people should be getting 20-30k cash back on a purchase.  Is this really happening in your marketplace right now?

As most here have already mentioned a cash out refinance or a home equity loan/line would be the only way for a borrower to legally get cash back at closing.
  • February 01 2011
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I can only imagen that you are talking about a refinance and get the equity out of your house.  Anything other than that is totaly against the law.
  • February 01 2011
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Cash back at closing is prohibited.  If a seller is paying closing costs the buyer can only be reimbursed for out of pocket expenses such as the appraisal. 
  • February 01 2011
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On a purchase, that's also known as mortgage fraud.  This happened often during the boom times but haven't heard of it happening since.  As Robert said below, an equity line or refi can provide funds at closing
  • February 01 2011
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Profile picture for wetdawgs
You'll have to ask those people, because it isn't a normal situation for purchase loans.
  • February 01 2011
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On a purchase you do not get cash back.

With a refi you simply tell your Loan Officer for how much you would like cash back. If you have enough equity and you qualify,..you get a check after closing.

  • February 01 2011
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