Is the $800 figure from total payments for the year divided by 12? What happens after month 24? Will you then have to give him $800 per month? I don’t see a conflict since you would have the deed. As long as the agreement spells out the method of payment for the seller’s loan it shouldn’t matter. Sending the seller the payment is one option, but maybe the fact it goes to him personally means you will have to make sure the payments are getting paid. I haven’t done one yet, but this might make me uncomfortable. You won’t have a record of it otherwise other than your payment to him. Seller gets no benefit is insisting loan is paid this way. The faster the loan gets paid down the better off you are. You could tell him you prefer (or make it company policy) that all monies are paid in the name of the mortgage company, either by your check or through an escrow account. If you don’t like his setup ask him what his concern is. If he is worried about it getting paid, I’d rather write a check to mortgage company and send to him for forwarding. The only plus I see in doing it his way is closing faster. If you had to wait until the MSP was canceled it might be a few or several weeks.
You could of course accomplish the same thing he is by paying an extra payment each year or add on a principal payment each month.
Posted by Adam Campbell on July 23, 2003 at 17:14:18:
We have a seller willing to deed us his property and keep his mortgage in his own name. He’ll make 6 months full payments and then 18 months paying $200/mo (total mortgage payment is about $800/mo). The “challenge” is that he is using an MSP, or every other week, payment plan which allows him to pay 13 payments per year; and it is automatically withdrawn from his account. In turn he wants us to pay him $600/mo and let the payment continue to be made automatically from his account. We think this is not orthodox for Subject To deals, but isn’t it true that the house would then be paid down more quickly than if we made the payment ourselves each month (yet we only pay the $600)? Also, is there a conflict between him remaining as the payor, and our power of attorney (that he signs over to us). Bottom line: Is it possible and/or worthwhile to allow him to continue paying the mortgage even though he signs over his beneficial interest to us? Or do we walk away if he refuses to go off his MSP program and let us make the payments?
Posted by B.L.Renfrow on July 23, 2003 at 21:25:20:
…is, what is the seller’s concern? Is he worried you won’t make the payments? If so – and that would seem to be the only reason he would insist on continuing his present arrangement – go ahead and do it his way. BUT – make certain you verify every month via the lender’s web site or 800 number that the payments are actually being made.
The last thing you want is to be sending the previous owner $600 every month and have him walk with your money and not make the payments, and you not find out until you’re several months in arrears.
If it’s an otherwise good deal, and this is a deal-breaker, if you can’t address the seller’s concerns any other way, I’d go ahead and play along, for the time being.