VA workaround - Posted by aphco
Posted by aphco on March 17, 1999 at 14:27:42:
(same post from “cashflow forum”; I should have posted here.)
First off, let me say, bare with me. I’m a beginning investor, therefore, some of my assumptions/theories may be a bit off. My situation…
There’s a house that I want (possibly to live in) which has a qualifying VA assumable mortgage on it. It’s a 4br, 2.5ba priced between 10K-15K higher than the comps suggest for the neighborhood. The sellers have agreed that the house price will probably need to be lowered. To assume the 8% mortgage, they want 3K down. They’ve been reassigned and must leave in late June/early July. On the brochure for the house, it is written “cash to mortgage = 17,550”. Anyone know what that means? Is that how much room they have to negotiate on the price? Does this mean the amount remaining on the mortgage is actually 189,000 - 17,550 = 171,450?
I only want to have to qualify for the VA loan as a last resort. (I want to put out as little cash as possible right now to acquire this property.) Below outlines my steps to circumvent the VA (due on sale clause). Please let me know if this will work and if not, what I can do to make it work.
- I would give the seller their $3,000 down payment.
- To get around the due on sale clause, I would set up a land trust with either my attorney, my corporation, or an “unnamed trustee” as the trustee, and have it later transferred to my name.
- At a later date, I will refinance the mortgage at the going 7% rate.
What liability does the trustee have at this point?
Does this plan sound feasible or should I just attempt to get them to go with a lease/option?
ALL comments welcome.