Like attorneys and IRS agents, sometimes we mortgage bankers get a bad rap. We can of course lay claim to our share of bad apples, but I am particularly proud of the opportunities we at Van Dyk Mortgage provide borrowers.
One opportunity in particular (that you won’t find with every lending institution!) is the opportunity for an escrow holdback. This devise can go a long way in supporting a buyer looking for the proverbial real estate deal.
While there’s no denying there are still chances to score a higher end property at a fraction of its value, anyone who has shopped the foreclosure market knows they will often find homes that were not consistently maintained; especially if the owner was underwater and did not have the funds to allocate to home maintenance. And, once in the bank’s hands, measures to keep the home up to snuff are not necessarily being handled.
Even worse, a good percentage of homes on the foreclosure market can be missing things like bathroom fixtures such as a sink or a toilet, or have roofs or flooring that will not pass lender inspection for conventional, FHA, or VA.
For these circumstances we offer both the buyer and the seller the opportunity to drop money into an escrow holdback fund at closing whose proceeds can be applied toward items that would make the home compliant and therefore able to be financed for purchase. The clock starts when the ink dries on the closing documents and we have ten calendar days to complete the repairs/replacement of whatever is missing. Then a re-inspection is scheduled for no later than the 10th day after which the funds in escrow are released once the re-inspection report comes back noting the repairs are complete.
Nine times out of ten it is the buyer who will pony up the cash to fuel the fund, but every real estate transaction has its nuances; no two are ever the same.
At the end of the day, in certain circumstances, leveraging an escrow holdback can really save the day. Again, these are considered on a case by case basis and all recognized lending rules apply as far as qualifications and risk factors. We just like “thinking outside of the transaction” if it will help our clients get what they need!