Posted by Kristin on January 07, 1999 at 20:18:43:
Have you considered doing a No Doc loan for 70-80% of the purchase price (depending on your credit) and asking the owner to carry a second with a balloon?
I know it’s a simple formula, but sometimes those are the ones most often overlooked.
I promise you, if you really want the house, it can be done. My husband and I bought a house last summer that we should probably have waited a little longer for, and we made it work. E-mail me and I may have another way to make it work for you.
Best of Luck,
Kristin
Posted by Michigan on January 07, 1999 at 15:33:52:
My husband and I weren’t really looking to buy a house, nor to sell our current home, but we made the mistake of stopping at a FSBO open house that we couldn’t afford ($245,900).
And, of course, as a result of Murphy’s law, we fell in love. Anyway, the house is probably about $30-50K under MV. The people are building the same house (only bigger than the current 3500 sf, and on 40 acres rather than 10). I thought maybe we could get a 100% LTV mortgage and pay off all of our debts and be able to afford it, as long as we were willing to eat M&C for the next 20 years. Unfortunately, the banks don’t see it that way!
So, then I thought I’d call the owner and see if they’d let us assume their mortgage and buy back a second mortgage, failing that, maybe a land contract, lease option, or just plain rent it to us forever.
Can you believe it? These people don’t have a mortgage. Oops, excuse me, I forgot where I was. Of course you can believe they don’t have a mortgage, it’s me that finds that hard to believe!
Unfortunately, they are not interested in letting us assume a mortgage they don’t have and they are also not interested in a land contract, lease option etc. Any ideas on how I can persuade them?
Posted by Sue (NC) on January 08, 1999 at 08:29:46:
The house looks like a steal to someone who wants to live there, but is slim as an investment (85% or so off market). M&C gets pretty old after a few days, and the beautiful home may not be as attractive if you have to wait 20 years to furnish it. Not to mention how you might be kicking yourself if you spend every penny for the perfect HOME just before you find a great INVESTMENT which requires just a little cash.
While I’m a firm believer in the power of leverage, overextending yourself is definitely NOT the way to go.
If the folks will accept enough of a discount on the interest rate to make it AFFORDABLE, by all means go for it.
The generous new tax law (no capital gains tax on profits of up to 250K on personal residences) makes your job a harder sell. Your most persuasive argument seems to be that you are there NOW and definitely WANT the house. Perhaps your FLEXIBILITY might be another issue- say if you are willing to wait until they finish building their new home, and that you could adjust your move in schedule to meet their move out schedule (since building almost always means delays).
But if you’re still going to be mortgaged to the point that you can’t afford much of anything else, I would try to flip it to a retail buyer- perhaps eaking out of the new buyer a right of first refusal when they go to sell.