Posted on: 16th Nov, 2010 06:53 pm
I am talking to an owner about owner finacing and the owner currently has a mortgage on the property. My question or concern is...if I make a payment and the owner pockets the money and doesn't pay his morgage payment, how can I protect myself. Or can I?
Tom
Tom
Hi jtmcdon,
As there is a mortgage on the property, it will not be a good option to go for owner finance. If the lender comes to know about it, then he will want the loan to be paid in full or he will foreclose the property. You should go for owner finance only if the property is paid in full.
As there is a mortgage on the property, it will not be a good option to go for owner finance. If the lender comes to know about it, then he will want the loan to be paid in full or he will foreclose the property. You should go for owner finance only if the property is paid in full.
If your talking to the owner about owner financing and they have loan on the property. Then you should be doing a lease purchase on the house. A lease purchase is the only owner financing you can do with a loan on the property. The lender will only foreclose if they don't make the payments.
A lease purchase is where you are basiclly renting the house for a period and of time and at the end of the lease you are to buy the house. You do 2 agreements at the sametime a Lease and the Purchase and sale.
In the agreement you can ask for proof of payment each month that they paid the mortgage. It's hard to protect yourself with lease purchases, you are always taking that chance that they will not pay the mortgage.
Also, if the owner is putting together the agreement themselves have a lawyer look over it to make sure it's legal and not going to hurt you. Goodluck
A lease purchase is where you are basiclly renting the house for a period and of time and at the end of the lease you are to buy the house. You do 2 agreements at the sametime a Lease and the Purchase and sale.
In the agreement you can ask for proof of payment each month that they paid the mortgage. It's hard to protect yourself with lease purchases, you are always taking that chance that they will not pay the mortgage.
Also, if the owner is putting together the agreement themselves have a lawyer look over it to make sure it's legal and not going to hurt you. Goodluck