Cashing Out Tenant Buyer

[TSH_Investor]

I am currently in Texas and have a question regarding cashing out a tenant buyer. I am trying to get a house we have sub2 out of the original sellers name and re-financed into our tenant-buyer's but they do not have an adequate down payment. Has anybody ever financed a TB's down payment in the form of a second mortgage? Does anybody know if banks would go for this these days?

Here are the #'s (closing costs have been left out for clarity):
-House is currently sold for $129,900 to our TB.
-Our current mortgage is at $99,000
-Potential 1st Mortgage: $103,920 (or more depending on what banks are giving these days)
-Owner Finance 2nd Mortgage: $25,980 (or less depending on how much the bank is willing to finance plus whatever they can muster for a down payment)

Thanks!

[Bluemoon06]

My bank has asked for 3% equity in the deal.  They will take me discounting the 3% or the tenant buyer having a down payment for that 3%.  In your case that would be selling the house for $126,003 instead of $129,900.

I don't know if that is a deal for me or their policy.

[Dave T]

I thought TX prohibits second mortgages.  I had always heard you can't even get a HELOC in TX.  Of course this was several years ago.  Is this still true today?

[Bluemoon06]

No you can do a second mortgage and HELOCs in Texas.  The law changed about 4 or 5 years ago now.  They have restrictive rules but can be done