Need some good ideas and advice. - Posted by Dave

Posted by Dave on March 01, 2001 at 18:52:26:

Okay, I’m very new at all this. How and Where for the paperwork for such a deal to be made. Obviously not through a bank but a title company? If the house is appraised or worth $120 - $130 thousand and I’m dealing with about $26 - $27 thousand per relative (3 = $80,000) and my name has been seasoned on the title for a year then couldn’t I refinance through a bank for the value of the home, just based on the equity I would already have in it? Which would then payoff the notes. Or alteast allow a big chunk of it to be paid. Is there anyway to get cash righ away out of this deal to offer some money up front? The reason I ask this is because with what I have coming in, financially, goes right back out. Which is why I thought of possible balloon payments instead of monthly payments atleast until I can get some money from the equity in the home.
Again, I appreciate your time with this. I feel so out of place when it comes to this stuff. Although I’m trying to learn as much as possible as soon as possible.

Need some good ideas and advice. - Posted by Dave

Posted by Dave on March 01, 2001 at 15:07:50:

Here’s the skinny: I’m trying to find a way to purchase the “family” owned house, which I currently live in. There is a “will” to the house with three names who are beneficiaries; 1 grandma 2 cousins. I don’t have the credit for a loan and don’t have cash. The house is free and clear. The house is worth $125,000 and I can buy for $80,000. Is there a way? Could I have them agree to notes, deed the house to me and then after a year, I could get a 1st mortgage or home equity on the house and pay them their share of the house? I was told that I have to own the house for a year before I could get money out of it (via mortgage or equity loan), correct? Is there a way, if all parties are willing to be open and agree to the creative financing? Or even if two of the three agree (grandma is a lock). Thanks in advance for your time and opinions.

Re: Need some good ideas and advice. - Posted by phil fernandez

Posted by phil fernandez on March 01, 2001 at 17:21:26:

Sure you could get them to owner finance you. Instead of one note of $80,000 you could break that one note into three notes with each of the beneficiaries having their own note. Down the road one of the note holders may want you to cash them out and this is where a discount for cash could come into play.

The one year holding period you refer to is for title seasoning. The one year will also give you time to work on your credit issues.

It’s a very doable deal if the three relatives agree to finance you.

Re: Need some good ideas and advice. - Posted by Dave

Posted by Dave on March 01, 2001 at 17:44:32:

If they owner finance, would they still have to deed the house over to me. And after a year of ownership, couldn’t I get a 1st mortgage or equity loan and pay off the beneficiaries? I don’t think I’ll even need a note for grandma just the other two. With maybe two or three balloon payments, yearly? How about going with a Hard Money Lender? Any other thoughts? Thanks for the information. It very much appreciated.
With the credit, it is not bad, just overextended. With the 30 - 40 thousand dollar difference in the buying price and the actual home value, I would be able to get rid of all my debt. Again, thanks.

Re: Need some good ideas and advice. - Posted by phil fernandez

Posted by phil fernandez on March 01, 2001 at 18:14:23:

You are giving each relative a mortgage deed and note for the deed to the property. Just like any other transaction.

After a year of title seasoning you could refinance them out of the deal .

Balloon payments would also work here, but a caution with balloons : are you sure you can get financing when the balloons come due. Interest rates may be higher and there may well be other factors in the future that would not allow you to refinance them out of the deal by the way of the balloons.

I would not go hard money. Way to expensive with the points and interest rates.