Creative Financing Options

Real Estate Agent · Mobile, AL · Member since 2022 · 9 posts · 4 votes

My finance and I are under contract for a house that was supposed to have an assumable loan. But, turns out the lender will not allow the loan to be assumed. We want the house and the interest rate and the seller wants out. We’ve looked in to possible subject to or owner financing or a rent to own deal.

Issues with subject to or owner financing insurance how will that work and what is we go to apply for another mortgage loan in the future. Will it raise a red flag with the lender that we hold title to a house but the mortgage lien is in some else’s name?

Rent to own, we may live there for a bit but we intend to rent the property out and we do not want to run into issue with the seller when we go to rent it.

Are there any other ways to make this work?

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
4y
@Ashley Kinnaird
Buy it and pay todays interest rates. Not many other options
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James R Dean
Rental Property Investor · Member since 2021 · 38 posts · 19 votes
4y
@Ashley Kinnaird Of course the lender will not allow you to assume the mortgage, because they have not check every crevice of your person to see if you are credit worthy. Homeowners want the same money others were getting 6 months ago, but then do something stupid like ask the bank if it is ok to let someone else own their house and pay their mortgage. Most large banks, Chase, Bank of America, don't know houses have been taken Subto. Smaller banks however keep closer track of their assets. Now that his bank knows his plans, it could be difficult to continue that path.
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James R Dean
Rental Property Investor · Member since 2021 · 38 posts · 19 votes
4y
@Ashley Kinnaird I would look at a lease option or contract for deed now and retry in a couple years after things cool down with the bank. Lock in a contract for purchase price, rates and what will happen in 2 years. Go through a creative finance related title company and tell them what you are trying to do. If you have any questions, I will try to check back here or DM at IG waymakerresolutions
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Ashley Barlow
OP
Real Estate Agent · Mobile, AL · Member since 2022 · 9 posts · 4 votes
4y
Thank you everyone for the responses. The sellers agent is not giving up on this - long story short, apparently it’s been escalated to the President and VP of the mortgage company! We should know something today. Assuming this loan assumption still will not work out - piggy backing on the lease to own option with the contract in place for us to buy in a billion years (lol) once rates give, could we do a joint tenancy deed with the current owner? With that, technically, the house has not been sold and should not trigger a due on sale. Am I correct with this? Then we just put in the the purchase agreement seller to be removed from deed once buyers obtain their own financing. But, then we come into the situation of possible negative equity once rates do go down. 😩

Another way I’m thinking about this, is possibly transferring it into a trust where we (the buyers) are the only ones on the trust. Based on my research that can’t trigger a due on sale. The latter isn’t ideal as I’m not sure the seller will not want to go for that, I guess it would depend on exactly what her situation is and how desperate she is. Also still wondering how that would work should we go to apply for another mortgage in the future.
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Dylan ThomasBusiness Member
Real Estate Agent · AL · Member since 2021 · 90 posts · 44 votes
3y
@Ashley Barlow Good afternoon!
I came across this thread and was very curious as to how this story ended!
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Ashley Barlow
OP
Real Estate Agent · Mobile, AL · Member since 2022 · 9 posts · 4 votes
3y
Quote from @Ashley Barlow:

Thank you everyone for the responses. The sellers agent is not giving up on this - long story short, apparently it’s been escalated to the President and VP of the mortgage company! We should know something today. Assuming this loan assumption still will not work out - piggy backing on the lease to own option with the contract in place for us to buy in a billion years (lol) once rates give, could we do a joint tenancy deed with the current owner? With that, technically, the house has not been sold and should not trigger a due on sale. Am I correct with this? Then we just put in the the purchase agreement seller to be removed from deed once buyers obtain their own financing.
Another way I’m thinking about this, is possibly transferring it into a trust where we (the buyers) are the only ones on the trust. Based on my research that can’t trigger a due on sale. The latter isn’t ideal as I’m not sure the seller will not want to go for that, I guess it would depend on exactly what her situation is and how desperate she is.

@Dylan Thomas we ended up not getting the assumption the lender would not allow it. We tried to purchase sub-2 but the seller (or the sellers agent) wasn’t going for it, so they ended up renting and we bought direct from the builder. Now that some time has passed I am considering reaching out to the seller to see if there’s any opportunity to work together.
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