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Thursday, May 29, 2008

Daily Observation - 100% Financing

Today more than ever there is no lender in the market place lending 100% of the purchase price. There are rumors in the economic arena that SBA will lend 100% for professional degreed individuals, such as doctors, lawyers for their practice.

This also is not true, the way some lenders get to the 100% is that they lend them money for their furniture fixtures and equipment plus the real estate and they theoretically get 100% of the Real Estate because they borrow 90% of the entire project which in many circumstance's is greater than 100% of the property value, but they still bring to the closing table 10% of the entire project. So if they think that is 100% financing so be it, we know better.

Today I had a potential client call and tell me they were buying a coffee house/restaurant after questioning them I found out they they had zero money to put down. Why would a Realtor not pre-qualify this client and not waste everyone time.

The only way that this deal could happen is with a gift letter. A gift letter is acceptable down=payment and is used where eh actual borrower does not have the money for the down payment but a family member is willing to give them the money. Other than seller carry back for the entire purchase price EVERYONE needs money fora down payment.

For further information on SBA Eligibility Requirements continue to read this blog every night.

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