First Capital Funding Corporation receives many inquiries about simultaneous closings, many of which can not be funded due to not meeting the requirements to make them a viable option. So what are Simultaneous closings. The term "Simultaneous" refers to a closing happening at the same time as another set of documents being executed of "closed". In the world of seller financing, the term signifies the creation of a seller financed note being created and simultaneously purchase at closing.

Due to its nature this form of financing is very popular with home sellers and note brokers alike. But to make this transaction work it is important to understand that all the elements that make a note attractive must be met. These elements are:

• The note must be in first position
• Good down payment-10% or more of the purchase price
• The note must have attractive terms such as interest rate, terms and payment amount
• The note must be created in an "arms lenght transaction"
• The home buyer must buy the home to live in it
• The credit of the person paying on the note must be "decent"

Many transactions that are submitted do not meet these requirements and as such get turned down.
When analysing these transactions it is important that the submitting party (Seller, broker, etc) understands what makes a good note.  So if you convert the bullet points alisted above into a checklist you can easily avoid working on deals that cannot get funded.

Checklist:

• Is the prospective new note to be sold in first position __Yes ___No
• Is the down payment 10% or more of the purchase price __Yes ___No
• Is the interest rate on the note 8.5% or above? __Yes ___No
• Is the term of the note at least 120 months? __Yes ___No
• Has the owner selling the home owned the home for more than a year? " __Yes ___No
• Is the buyer going to be "owner occupant"? __Yes ___No
• Is the credit of the person paying on the note at least 650 mid score? __Yes ___No

If the ALL the above answers are "Yes" you might have a deal.  The credit report must be a trimerge credit report and we will use the mid-score.  The credit report must be 30 days old or less.  Other aspects that are important such as the appraisal being used is important.  If an appraisal has not been done, then one will be ordered by us. 

So the note business is not dead and we are still doing simultaneous closings or "simos", they just have to met the guidelines above.

To submit a simultaneous closing proposal click here

Werner Robles
June 2008

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