I have been looking for a home for awhile and due to a current Chapter 13 BK and a deed a lieu I did I have to wait about 18 months (based on current rules) to get an FHA loan. I have the income and cash to put 20% down. I even found a HML willing to do 20% down 5points and 7.99 fixed or 7.5Adjustable but that means on a 300K home I am coming with 80K out of pocket and still most homes need work for 300K in my area and the PITI is around 2600 month which is more than I want to pay. I want to be at 2100 max.
SO now I am thinking to look at homes advertised for short sale, and see about bring the mortgage current and doing subject to and have the home title to me and keep mortgage in place. Then in 2 yrs I can purchase the home I been renting. Of course I have to pay taxes ins upkeep.
I am thinking this can save a lot on the downpayment if i can find a homeowner who is under 50K in arrears. However I talked to a few realtors and they do not want to show short sale listenings because they loose out on the commission unless I pay them directly.
I told 2 realtors after this came up I am willing to pay a $5000 fee now and willing to pay more when I redo loan to give them a fair commission. None were interested.
Craigslist sucks to find owner occuppied preforeclosures in South FLorida.
Any ideas? Is this even a good idea. Of course for this to work I need someone who also is not upside on the mortgage but our prices have come back to 2005 prices already.
Ideally, if I find someone who bought in 2008 or more current prices were lower here and should be fine. I was evening thinking if the owner can work with bank to have mortgage reduced if they bring it current. I know we can create contracts to protect me and can take a few months
Thought??
I actually have found 2 HML who will fund the deal because of it will be FICO based (742 middle) They both have different terms which equal same cost over a 24 month period but I like to go another route maybe to get financing.
And 1 of the HML even had the written guidelines from the investor who was funding the loan on a home i backed out of after 10 days due to home inspection issues. Seller did not want to give enough concessions to take care of the issues. THe HML had a 7 yr balloon payment, which is enough time to refi
What difference does it make what the HML terms were?
You either lied to the HML about your intentions to occupy the house, or you and the HML are playing the “Don’t Ask, Don’t Tell” method of qualifying for a hard money loan.
Regardless, HMLs don’t make owner-occupied loans.
Of course, I could be wrong, if this wasn’t a genuine hard money lender, but that’s for a whole 'nother thread.
It’s a good idea, but completely illegal if you are looking at doing a subject to on homes with lis pendens filed.
Check out the Florida Foreclosure Rescue Act that was signed into law by Governor Crist back in the day. I believe it’s chapter 501.1377. Here’s the main point of the law that will land you in jail if you pursue this on lis pendens homes:
(d) In any foreclosure-rescue transaction, before or at the time of conveyance, the equity purchaser must fully assume or discharge any lien in foreclosure as well as any prior liens that will not be extinguished by the foreclosure.
This means you can pay off the amount of back payments to reinstate the loan, but if there is a transfer of ownership and you are put on title, then you have to either assume the full balance of the existing mortgage or pay it off in full. Leaving it in the original owner’s name would constitute fraud in this case.
So, it’s an option for homes that are in the 30-120 days past due and no Lis Pendens has been filed. That begs the question, how are you going to find properties that are just past due?
Over the years, I’ve purchased numerous homes with ‘seller financing’ rather than using banks. Sounds like that could be a solution to your requirements. I recently purchased another home with 5% down on a seller (private) financed 15 year mortgage, and the price was about $65k below market. No conventional loan requirements…just paperwork, exchange of funds, and closing.
Those transactions are available for the asking…many sellers I’ve purchased from did not know or think about financing until I offered as such…some will say yes; if you accomplish their goals in the transaction as well as your own goals.
Also, on occasion, I’ve been able to have banks take an REO, reinstate the loan, with a one time non qualifying loan assumption to me. Now for you naysayers out there…do not say this cannot be done because I have done so!
In any event…if you do not have credentials to buy in a conventional manner…then do not pursue such…go after what you CAN qualify for…which would include seller financing.