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Selling and Buying and Financing
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Leslie
Posted 3/22/2005 7:46 PM (#121)
Subject: Selling and Buying and Financing
We are preparing to sell our house and buy another and are confused about the handling of that financial transaction. Can we use the proceeds of our sale to finance the down payment for the buy and can closing costs be financed?
Alex
Posted 3/22/2005 8:48 PM (#123 - in reply to #121)
Subject: RE: Selling and Buying and Financing
That would be two different transactions. Once the property is sold, you can do anything you please with the money. You can not use pending money from the property you are selling to put down on the new house. If you have fair credit you can receive 100% financing on your new purchase with up to 6% seller contributions for closing costs. You can also do 103% financing for the new purchase with up to 3% seller contributions. If you would like more details, have any other questions or concerns feel free to contact me via telephone or email. You can always of course respond here as well, hope that cleared things up a little for you.

Alex Camisa
Senior Loan Officer
800-689-6819 ext. 583
acamisa@meritlending.com
Leslie
Posted 3/25/2005 12:46 PM (#124 - in reply to #121)
Subject: RE: Selling and Buying and Financing
Alex:

We can't use proceeds from the sale as down payment for the new? I am really confused now.

Let's say we currently have a $85,000. mortgage and a realtor has given us a market price of $160,000. We can't consider that $75,000. for downpayment, realtor costs, upfront and closing costs for the new home?
Alex
Posted 3/26/2005 3:30 PM (#132 - in reply to #121)
Subject: RE: Selling and Buying and Financing
We are looking at buying this on contingency. This is a condition put on an offer to buy a home such as making an offer contingent on the sale of your present home.

Under Section 1031, owners or real estate held for investment or for use in a trade or business can exchange their property tax-free for "like-kind" real estate. Like-kind has been construed broadly by the IRS: You can exchange a rental house for an apple orchard, for example, or a Manhattan duplex for Colorado mineral rights. The properties can be across the country or across the street. They don't have to be swapped one-for-one directly, either. Professional exchange "intermediaries" and realty brokers sell your property and hold the proceeds in escrow. Once you've located suitable replacement property, the intermediary releases your escrowed equity cash to close the deal.

The basic concept here is straightforward. If you own equity in one piece of real estate, and you merely swap it for equity in another, there should be no taxable event. Only if you receive cash or other non-like-kind assets from the transaction do you trigger capital gains treatment. The advantage of Section 1031 is that they can effectively have their cake and eat it, too. Your property can jump in resale value -- double, triple, whatever- -and you can use that increased equity to trade up, tax-free, to something better, bigger, more profitable.

Let me know if you have if I can assist you with any questions or help with unconfusing you with this process.
thomass123
Posted 4/30/2008 1:19 PM (#1749 - in reply to #121)
Subject: RE: Selling and Buying and Financing
thanks for suggestion, i m recently agree with you all ,there are few people who share this type of information
thanks a lot.

Loan Doctor
Posted 8/24/2008 11:28 AM (#1836 - in reply to #121)
Subject: RE: Selling and Buying and Financing
Posts: 15
You can always use the proceeds from the sale of your property towards the purchase of another one. The sale has to be finalized and the extra funds given to you before your new loan goes into effect, but that is a simple thing to do.

Many times there is a contingency written into the contract stating that the purchase will not happen until the buyers existing home is sold.

Charles
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