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Home >> Lending >> Home Mortgage
Getting Cash to Buy a House
Ok, here is the situation. I had found a home, it's on the auction block. The house is valued at about $300,000 and it's going for $100,000. I've seen it, it looks great. Now mind you I have been pre-approved, and I still can't get the house because they only want cash, or a cashiers check. I would have been able to get it, and been in a great situation, but because I'm the little guy in this industry I can't get that nice jump ahead in life. I would like to know is there a way to purchace a property in this manner with the bank's backing? Do I need a bank representative with me so they can sign over a cashiers check right there on the spot when I've found that deal? How can I pull this off, and get this situation to benefit me as well as the bank? My good fortune is the banks good fortune.
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 You should speak with your banker and ask what it would take for you to get a Letter of Credit. This is a type of a standby loan that allows you to make a bid, win that bid and draw on the Letter of Credit immediately. It is a pre-arranged loan. It is due in a very short time and is generally paid from the sale of your property or another loan to replace it. That replacement loan could be your long term mortgage.
The potential holdup here is collateral for the Letter of Credit. You will have to arrange that with your bank in advance and policies will vary from bank to bank.
Published on BankingQuestions.com 12/11/06
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