Hello,
I am new to real estate and currently do not own a home but I want to. Is it possible to buy a house this way.

I have about 50k in credit card debt so I know I can not get approved for a mortgage right now, not that my credit is bad but my Balances are all high.

I want to buy a house for around 100k but I need the seller to get a home equity loan of about 70k and I will pay my debt off with that money and have some extra money for security.

I will then buy the house for 170k from seller, the seller will take that 70k and pay his home equity loan and pocket his original asking price.
This will all be done in a 2 week timespan!

Can this be done? Is there a better way then this being in my situation?

I don't think that will happen. By him paying off your debts you are falsely inflating the value of the house. Also who is going to sell a $170,000 house for $100,000? He could get more than that from an investor. If the house is only really worth $100,000 you'll never get the appraisal up to $170,000 so the bank will never approve the mortgage. Your plan is flawed. Try paying down your bills a bit and going for a mortgage you can still get 100% financing and have the closing costs included in the mortgage or have the seller pay it. $70,000 is just too much money for a property of that value and the deal wouldn't make sense for the seller or the bank.

Thanks for the reply,

A better example is 200k and getting 30 -40 back at closing. All the time houses are sold for less then the apprisal! That is why people always lower there price when they can't sell. This will work if the seller really wants to sell and no noe else is interested plus they get more money as well so it's a win win deal for both buyer and seller.

You're right houses are sold for less than the appraised value all the time, but the problem is you getting cash back at closing for debt. You aren't suppose to get cash back unless it's for repairs for the new property (might depend on state). Anything can work in real estate if the seller is motivated enough, but your idea although creative sounds a little complicated. The only real problem is you're using the money for your debts. It would sound more realistic getting the money for repairs and wording it that way in any contracts that are filled out (also keep the number reasonable because it could raise red flags). Of course what you do with the money later is your business.

That brings us to the next problem...would you qualify for a mortgage with the amount of debt you have? If your debt to income ratio is to high and your credit score isn't high enough you won't be able to get the 100% financing you need for the deal to go through.

You are correct I will have to say for repairs, or make a deal with the seller to give me cash back. Right now my debt to income ratio is to high to get approved for a mortgage, that is why I am looking for new jobs and might take a second job as well to improve the ratio and then I will go about the deal. Thanks for the great info.

A good thing to do also is figure out what your debt to income ratio actually is...since that's what the mortgage companies look for. If you know you're at 50% or under it's much easier to qualify for a loan (the lower the better for best rate and terms). Of course the lower your debt to income ratio the better and the more banks there are that can qualify you for a mortgage.

Debt to Income ratio's abbreviation is DTI (I'll also be using that in the explanation below). You might here that if you speak to a mortgage professional, so might as well know it.

1. Add up your monthly expenses. Rent/Mortgage, Car Payments, Credit Cards, Child Support, etc... When you add up your credit cards and other payments only look at the one's that show up on your credit report since that's usually all lenders look at. Also only include only the minimum monthly payment (more than that and you'll lower your DTI). = Debt

2. Add up your gross monthly income (before taxes), include alimony, child support, overtime, any side jobs you might have, etc... If you make a different amount every month take the last two years of income and average out the monthly figures. = Income

3. Divide monthly debt and monthly income. debt ÷ income = DTI %

That's it. Three easy steps.