Take over a mortgage? Let's get creative!

8 Replies

BP,

We have our eyes on a Seattle multi family property. We know the seller is motivated and in our one conversation with the seller's agent, although they were hesitant with the details, we know there is a mortgage and there may be some consideration of taking over the mortgage.... though we know such a thing would have to be agreed to by the mortgage company and we would have to be approved. They said they are probably not interested in holding a note, they want cash to buy another property elsewhere. Is such an approval by the mortgage company any different then if we were to go apply for a loan on our own. Is there any benefit to keeping the existing mortgage in place?

We can put together a 25% down payment for a traditional loan, but we would prefer not to. And, because my wife has made the leap to self employment in real estate she doesn't have a W2, nor two years of tax returns, to verify income, and therefore we can't qualify for conventional lending.

Our agent is somewhat hesitant to present any offer that is "creative" as he doesn't believe it is going to work. I understand, but I am frustrated by this because I want my agent to call the sellers agent and find out if there are ways the seller might help finance.

BP - Before I direct my agent to go to the table and figure out a solution that works for everyone, what strategies, if any, can I arm him with? Master lease, lease option, other? How do you convince a seller to carry a note, help with financing?

Thanks,

David

@David Pendergraft  If the current lender agree to allow you to take over the mortgage, then you would go through the same underwriting as you would if you got a new mortgage. Given your wife's lack of W2 or 2 yr self-employment income, the loan would have to be done on your income alone. Do you have sufficient income to qualify for the mortgage?

If conventional loan is not an option, then your only option is a portfolio residential lender, stated income lender, hard money lender (in this order, it gets more expensive as you go down the list).

You have to decide if the property would be a good investment if you are stuck with a 8% loan for 4-5 years. Hopefully by then your wife is settled into she new position and you can refi the loan to a conventional loan.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Suggest you get a new Realtor!     Seriously!!!  Let me Repeat. You really need another Realtor!

How do you know if you do not ask!???

Most Realtors are a waist of time when it comes to creative anything!

Perhaps if you offered the banker the 25% that you have as a payment on the loan he would be more receptive to allowing you to assume the note??

You should do a subject2 on this property.  The realtor do his job or as The Donald use to say, "You fired".  Being the seller is motivated, you can do the subject2 using a title company to get the deal done without a realtor.

To be clear, if it is not a FHA or VA it will Not be assumable. If it is assumable, you will have to meet the same underwriting requirements as a new loan. If a 25% "pay down" of the loan would get the payment low enough for your DTI to work, then good. If not, you won't qualify for an assumption. It's not the agent's fault that the square peg won't fit into the round hole.

Real estate is about cash or terms with the seller

You need to get in front of the seller or this is a waste time

Don't ever let an  present any offer that is got to do with creative financing whether it is a sub 2 wraparound mortgage, lease-option, please purchase, etc.

If the sellers truly motivated, knock on their door and say 

"I need to talk to you Mr Seller in person and show you what I can do to help you get the most money out of this property

I'm happy to pay the realtor their commission but you need to sit with me privately first"

Ditto what others have said.  We have done lease options, mortgage wraps, etc.  Don't assume anything until you talk to the sellers.  Don't assume the existing lender has to approve what you do.  

First and foremost, find out the sellers true motivation and "pain" point, then bring them the solution.  Not to rag on agents, but most agents aren't going to bring the solution to the seller for you, especially if it is creative.