Posted by Ken (ILL) on March 13, 2001 at 18:19:09:
land contract…owner keeps title, but you get everything else, includung payment. However, the payment is usually to owner or their bank (The latter is prefered). Then when paid off, you get the title.
Wrap-around (Subject To)… You sign a contract stating that you will take over the loan. This contract is usually with the SELLER, NOT THE BANK. The bank MAY call the note due, but if you keep on paying them, 99.99% of the time they will remain happy. Especially if you can pay MORE than the payment due. The title is yours (if you remember to get it!), the original note is STILL in the original ownwer’s name, DOS can be called, but if you pay, everyone usually comes out smiling… win-win-win situation.
I am a newbie and I placed and ad in the paper saying " I will buy your house"
Well a very motivated seller called me- and told me he had a home with a $45,000 FHA assumable on it - he does not want anything just out of the property, and wants me to assume the loan-
PROBLEM- blemish on the credit! So someone advised me to do a wrap around mortgage, I really do not know anything about this procedure- and wondered could you give me some advise.
The comps for the area are $100,000+
I don’t know whether to do a land contract/ land installment or what I am confused and in desperate need of advice.
If seller signs over the deed and I try to record it will this trigger the due on sale clause and if I do not record it can I still do a wrap around and or refinance?
Maurice,
Have you checked the date of your seller’s FHA loan. If it was made prior to 1986 (I believe that date is correct) then it is an NQA [Non Qualifying Assumable]and your credit blimish does not come into play. There is NO DOS ! Check it out.
Re: Seller Just Wants OUT-HELP - Posted by ken in sc
Posted by ken in sc on March 14, 2001 at 07:31:26:
Here is another thought. It sounds like you are very new and don’t have access to much money. (Don’t fret, we all started like that!) Why not find a partner with the money? If there is indeed a $50,000 profit, then there is enough for two people. It does not even have to be a sohpisticated RE investor. Who do you know who can qualify to get 50K quickly? Think and act fast. If your numbers are correct, someone is going to get a great deal soon - and it might as well be you.
Personally I would buy it “subject to” the loan. Get a lawyer to make the dead out correctly and search the title. Then, if you have a DOS problem later, which is unlikely, you can bring in an investor or refinance. Even with credit problems, on this type loan to value ratio, you can get a loan. Just ask Ed. And it will take the bank several months to actually foreclose or call theloan. Your refi will be done by then.