[I need help. Please read.]
There is a homeowner in pre-foreclosure. He has 40k equity and the house is worth 120k he is 5k behind on payments. If I buy it for 100k, he will have 20k equity left. How can I give the seller his 20k in equity? Can I make him payments or can I tell him I will pay him in 3years? When you take over someone's else payments do give them some money or do you just take his payments? What options do I have?
cut a check simple as that other wise have him listed it with an agent and get full value instead of taking a beating
@Fili Aguirre sometimes what people want, and what they can realistically get, are two very different things. I would offer to get the loan current, and take over payments. Keeping that foreclosure off of his credit may be worth more than $20k.
If you feel the property is worth more to you, than that's a decision you make. He certainly won't have $40k of equity when the house sells at auction.
@Jason D. Thank you man! Do you think that asking him to wait 4 years to get his equity would work?
@Fili Aguirre personally, i wouldnt offer anything over getting current and taking over payments. Once it hits foreclosure he has no equity and tanked credit. At least you're willing to save his credit and he can start over tomorrow, instead of having to wait 7 years for that forclosure to come off his credit.
@Jason D. Thanks!
Commonly referred to as a sub2 or subject to mortgage.
I would definitely go over the ramifications of foreclosure with him. It seriously messed up my credit for quite some time. 7 years is a long time to have that big red X on your credit.
Find out what it is he is looking for. Does he just want out of the house to move? Does he want to keep the house?
You could make a deal to take over the mortgage and get him current on payments. That would be much better than foreclosure auction where he won't even see that 40k in equity. He will get nothing.
If he wants out find out how much is left on the mortgage. Maybe you could work a deal where you get him current on payments and buy it from him outright cash or with a loan then refinance giving him some cash. Or take over his payments and get his loan current. There are definitely options and you may have to get creative.