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I have a seller, who is leaving town. He has an existing 15 year, fixed rate loan that has been paid on now for about 7 years. He is open to me taken over the payments. He wants some walking money. I don’t know if the loan is assumable or not, but in either case I am not concerned. I am going to purchase based on the amortization schedule. I can rent the home out and bust even and have the note flushed out in roughly 8 years.
Do I take over subject to existing mortgage?
Do I just take a lease option (recorded) where I make the payments then I receive deed at the end?
If I make payments directly to bank, will this red flag this account?I need some direction, any suggestions?
Hi Lee
If it will cash flow, buy it subject to or with seller financing that wraps the underlying loan.
just get a contract now and the title company will prepare docs and fed ex the closing docs to the seller if he needs to leave before they can get it all ready.
If you buy with seller financing that wraps the underlying loan suggest that you put a NO DOC clause in the deed of trust or mortgage so you could wrap the wrap and sell with seller financing if you wanted to.
making payments to the bank is the ONLY way you want to do this. It is no red flag. I’ve done lots of these. They just want to get paid on time and don’t care who sends in the money.
Sounds like a great deal – congrats!
Jackie
Yes you still get the deed.
the only difference is the seller gets a non-recourse note and a deed of trust or mortgage so it makes them feel safer.
If you stopped paying they could foreclose on you.If you don’t do a seller finance wrap, the seller is stuck if you drop off the face of the earth. There is no way for them to get their house back
and save their creditJackie
Just make the payments from your company checking account. I have all mine set up automatically with online bill pay Just put the name of the lender and the account number on the check. Make sure you get the pay stubs sent to you so you’ll know if there’s a change in payments, escrow, etc. You can do that by having the sellers sign a letter that says you are managing all affairs on the account and the statements should be sent to you. You send in the letter to make sure it gets sent.
For insurance, you should have the seller names as additionally insured.
When making payments “on sellers behalf” to their bank, do you disguise or setup a different account in which your payment is being made to the bank from?
His payment includes escrow items(tax & insurance)on his loan.Do I need to change or will this matter in regards to his bank paying the escrows? As far as ownership at courthouse being different I am not sure how this plays out. I know that I need to have my own insurance policy, should “seller” be name as mortgage holder? Sorry for all the questions, just want to be prepared if & when these things come up down the line.
Thanks for your help JackieLee
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