Can you contract for deed an existing mortgage?

Question

Hello everyone! My Husband and I found a nice duplex which I'm interested in purchasing. Problem is we are in the process of obtaining a mortgage loan so our credit is currently being used for another purchase. I was wondering if it would be possible to use seller financing to buy the duplex even though there is currently an existing mortgage on the property. Could this work?

Thank you everyone in advance,

Hillary

Thank you everyone in advance,

Hillary

Steve Vaughan · Answer

Is it possible?  Yes.

Is it likely the seller will agree to it?  No. Not unless they are a seasoned landlord or investor to understand it AND don't need the cash to purchase their next home.

Like Jay mentions, this would be a wrap-around mortgage.  The mortgagor discovers the 'sale' when loss payees on insurance are changed/ altered so there are some nuances to doing it.

Jay Hinrichs · Answer

google  wrap around mortgage or all inclusive deed of trust..  both allow owner finance when there is an existing mortgage that is not going to be paid off at transfer.

Issue is getting the seller to go for it.. unless there is a formal assumption and the seller is relieved of their liability to the existing mortgage the seller remains on the loan and therefore if its a loan reported to fico it stays there and if its a loan that has a possible deficiency judgement against the owner that stays there.

So its no issue really for you as a Buyer the main issue is risk to the seller  IE you default and the seller is in some tight spots.. they have a mortgage in their name but do not own the asset you do.