Take over Payments/Wrap around mortgage

5 Replies

I have a take over payments/wrap around mortgage deal in the works. I've never done one before. I know this much:

1. Get him to sign an authorization form allowing me to get all his mortgage details directly from the lender.

2. Comps to determine if there's enough spread between how much he owes, and the house value (he said he owes about 100k, the house is valued at 130k). Mortgage plus PTI=$850 month. Currently getting $975 from a HUD tenant.

3. Get a contract highlighting this a takeover of 'existing' financing, and give myself a 90 days grace period before the first payment.

4. Have a real estate attorney prepare all closing document

5. Close

6. Market property for a tenant-buyer. Probable terms: 10-15k down/120k. Cash out Finance in 2 years. 

Can someone help me and make sure I don't blow this deal?

Congrats on getting this far! I did something almost similar earlier this year on a 2bed/1bath. The motivated seller owed more than what it was worth. I used a RE attorney to have the home deeded to me and had a letter of consent signed by both myself and the seller and sent that to their mortgage provider. Within 2 weeks I was receiving their statements. One thing I did was get my own insurance policy and glad I did because I incurred 12K worth of water damage about a few months later after the transaction. At the end of the day I was able to have new flooring (carpet and linoleum) as well as paint in the entire house. Subsequently this allow me to charge a little bit higher for rent. It's cash flows $315. But look up "subject to REI" on here I'm sure you'll find tons of information. Also you may PM me. Good Luck!

@Kyle Fry The homeowner and I discussed how we wanted to proceed until it was good enough to get it in writing. The agreement was signed by us both (and actually this part no attorney was included...we just ensured it was notarized). Basically for us it worked out that if I sold the place, I would split the proceeds with her minus the overhead I’ve paid until that time). This way I didn’t have to come to the table with any money.

The mortgage statements:

I drafted a letter to have her mortgage company send me all statements (she of course had to sign the letter which included her SSN). I used a draft from the instructor from a Coursera course I took. Looking back I’m sure I could have found one on google. So she mailed that off and a few weeks later I was receiving her statements.


I have rental property insurance through USAA. So this part might have been easy because of them but I had them add her on this policy. The mortgage company still has to see the mortgage holder on the insurance. It’s been about 3 years and they haven’t inquired despite it being rental property insurance and not homeowner insurance policy. And when I had the water damage and had to submit a claim, USAA didn’t inquire either.

But there are several different ways this deal could have been done. This just happened to work for me.

Hope this helps!