Posted by phil fernandez on February 17, 2001 at 18:51:03:
Jim,
The bank mortgage would likely be in 1st position and the owner financed mortgage would be a 2nd. When going for a home equity loan on the property both mortgages would be added together against the fair market value of the property.
Both the 1st and 2nd mortgages would have been recorded and a title search that the bank would require before making the home equity loan,would show the two mortgages in the title opinion.
a simple newbie question - Posted by Jim G
Posted by Jim G on February 17, 2001 at 18:31:05:
at least I hope it’s simple. I live in Ohio. If I purchase a home (to live in) with 2/3 bank financing and 1/3 owner carry-back, can I then get an equity loan based soley on the difference from the bank loan and the home value, or will the carry-back automatically be taken into consideration (or does it become a matter of disclosure on my part to the equity co.)? Thanks in advance for any input.
Re: a simple newbie question - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on February 17, 2001 at 20:18:00:
Jim,
A strategy that is sometimes used is to have the owner carry back part 1/3 secured by another property that you own (if you have other property). This then leaves the equity in the property being purchased free to be used to secure a second mortgage.
Now here is something that I would not reccomend but it has been done a few times around Columbus, Ohio. Some investors that I know of were finding property to buy “subject to” the existing loan, then creating another mortgage for the sellers equity. The second mortgage was then just handed to the seller with a handshake and a thanks. The seller in this case is the mortgagee, and it is the mortgagees responsibility to record the mortgage and note. Often the seller did not know that and did not record, or did not record quickly. Sometimes there would be another mortgage on the property before the seller figured out that his needed to be recorded. Often the seller never did record.