Tuesday, June 4, 2013

What is Transactional Funding?

Transactional funds are used for intermediate funding in short sale and foreclosure real estate flips. This funding is same-day financing and the property will close to your end-buyer.  You only want to use transaction funds to complete the sale to a traditionally qualified or cash buyer. The buyer's funding is what repays the transactional funds.

Step 1

Find a REO Property usually through a Real Estate Agent or Banker.

Step 2
Transactional funding should take care of the  cost,  which is closing costs and any secondary closing costs for which you the buyer will be responsible for.  You need to know  the terms of the transactions; there is usually a  30 day holding period, this may not qualify  as transactional funding but it may be able to become a transactional deal.

Step 3

Go to Google and locate a transactional lender in your state. Tell the lender the type of deal you have so that the lender can determine the terms and conditions, including fees for the transactional funds.

Step 4

You should always have a list of  end-buyer for  any  property.  This will speed up the process for the transactional funds  being approved.

Step 5

The lender will give you a proof of funds letter. This letter is a pre-approval letter showing how much funding is available for the period of time and for the property you will purchase.  Some banks have 30-day holding requirement , you may need to put 20% down to use as earnest momney to secure the reminder  of the funds.

Step 6

Now you are ready for the  double closing providing there is no holding period required by the bank. A double closing transfers title on the same day, first from the bank to you and then from you to the end-buyer. If you need a title company that is well versed in these transactions, ask your transactional fund representative for a referral.

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