Posted on: 23rd Dec, 2009 08:10 pm
we are thinking about buying a home with the option of owner financing. the owner still owes money on the house. It is a real deal, 60k uder appraised amount. He is willing to work with us... unable to get traditional financing at this date. Willing to let us do work on property for down payment. what are our options?
Hi montgo,
Owner financing would indeed be a good option for you, given the fact that you are unable to get traditional financing. But there is an existing mortgage on the property. The lender may not allow the owner to enter into any sort of owner financing option until the mortgage has been paid in full. The owner needs to take permission from the lender before entering into an owner financing option.
Owner financing would indeed be a good option for you, given the fact that you are unable to get traditional financing. But there is an existing mortgage on the property. The lender may not allow the owner to enter into any sort of owner financing option until the mortgage has been paid in full. The owner needs to take permission from the lender before entering into an owner financing option.
I would not do it if the owner still has that other mortgage out there. If he stops paying, the bank will foreclose on YOUR new home.
I purchased a house like that once, with a Land Contract. The contract was for 3 years and at the end of the third year I had the option of walking away from the house, or refinancing it into my own name. If I decided to keep the house, the owner would give me $10,000.00 to assist with the loan fees.
Several years later, when I was studying for my Real Estate license, I learned more about Land Contracts. Apparently they're fairly popular, or were at one time, in the Northeast. I'm in California and nobody uses them here - except for me.
Several years later, when I was studying for my Real Estate license, I learned more about Land Contracts. Apparently they're fairly popular, or were at one time, in the Northeast. I'm in California and nobody uses them here - except for me.
Possibly it would be a good idea to talk about Leasing with the option to buy? Doesn't the payments made or a portion of the payment go towards the downpayment?
>>Doesn't the payments made or a portion of the payment go towards the downpayment?
Only if that agreement has been negotiated beforehand, and has been included in the contract.
Only if that agreement has been negotiated beforehand, and has been included in the contract.