Note #2 - Posted by Robert from Hawaii

Posted by GL(ON) on July 08, 2002 at 13:54:46:

Go to the bank that holds the first mortgage and tell the loan officer what you want to do and why.If your income justifies it and if your house appraises high enough they should have no problem giving you the money on a first mortgage.

You might also want to shop around and find out what other lenders are charging. If they want 5% and you go “Gee the bank across the street offered me 3.75%” they will usually match the better offer.

Staying with the same bank tends to reduce the cost and complexity compared to starting over with another lender.

Note #2 - Posted by Robert from Hawaii

Posted by Robert from Hawaii on July 08, 2002 at 13:32:42:

I have borrowed $40,000 from my parents in cash and want to refinance my house so I can pay my parents back. I will still have a little bit of cash flow, but my parents will be able to get thier money back.
The question is how do I get my lender to lend me the money to pay for both my first and second loan? Does my parents need to sign a contract with me, or what? where can I get that form from?
Thanks for responding.

Re: Note #2 - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 08, 2002 at 21:12:59:


GL(ON) gave your some good advice. Mechanically, what happens is as follows.

When it comes time for the new first loan to go on the property, the title company will send a “demand letter” to your parents, asking them what amount of money they “demand” to pay off their lien on your property. Also, that they sign some papers allowing the title company or the trustee of the second loan to put a document into the county records showing that the obligation is no longer against the property. Then, after the new loan is on, they will get a check for what they are owed.

Incidently, what are your parents going to do with all the cash? Do they have a good, high-paying investment in which to place it? If not, might it be possible for you to help them out by finding some investment at a very good price and you and they share in it? I once sold my father a 1/2 interest in a note and deed of trust which I had bought at a discount. He was getting about 4% from the bank and got 14% from his half interest in the note. These days the banks don’t even pay 4%.

Good InvestingRon Starr*