So my grandfather is sick, he has a house in Orlando, FL. Making payments on $83K, with about $10 K equity in it.
I am a first time homebuyer. I live in Los Angeles. My mom is planning on moving to Orlando to care for my grandfather and live in house with him as his primary caregiver.
I cant afford anything in CA, it’s way too expensive. I can afford FL however. Would anyone recommend how I can work out an arrangement to “purchase” his home in the most economically efficient way?
Would I do a land contract and make payments to him to make payments on his old mortgage?
Should I get some type of first time home buyer (HUD maybe) loan? Are these ok if you do not live in the property?
ANY help/ follow up questions are GREATLY APPRECIATED!!!
Thanks,
Adam
Hi Adam.
The simplest way for you to “purchase” this home subject to would be to use a land trust. This will keep the existing mortgage in place and in the original borrower’s name without triggering the “due on sale clause”. You can be the trustee and beneficiary of the trust. The property is technically owned by the trust, but you control the trust.
It does not matter who is living in the property.
Barry
Barry,
Using a land trust will not protect the OP from the due on sale clause. Either you are a newbie or just like to throw around incorrect advice. Either way it is irresponsible.
What you can do without triggering the DOS clause is have your mom purchase the home with you as a non-occupying co-borrower. Have your grandfather gift her the equity in the property. This will allow you and your mom to close on the house with no money out of pocket. As long as your mom plans on living in the house with grandpa you are fine. You will also qualify for the FTHB $8000 tax credit.
Christopher,
Have you ever done any estate planning? Have you ever had a mortgage called due because the property went into a trust? I would love to know because we have done over sixty trusts and have NEVER had a loan called due. Please tell me how many times it has happened to you. Do you have any actual experience doing them?
What I believe is irresponsible is throwing around insults and not explaining to the OP there is another way to do the transaction “in the most economically efficient way” (his words). Instead you tell him of the only way YOU as a mortgage broker know,which is getting a new mortgage. Sound real estate investing advice indeed.
in certain states, the trustee and the beneficiary cannot be the same person. I live in Texas and that is the case here. Just find out what the local laws are when it comes to trusts.
You do not need a trust to buy the property S2. The DOSC is not a big deal. Keep the note current and you won’t have any issues. I have said before, these days the banks are hardly calling loans due on defaulted notes let alone performing notes where the deed changes hands.