Heather S asked:
I see all these adds to take over payments for a homeowner, and only this much left to owe. They say no credit check no down payment, just take over ownership. Is that for real or is that a scam or is there a lot more to it than that. I just want to know if its a legitimate thing to do.
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I see all these adds to take over payments for a homeowner, and only this much left to owe. They say no credit check no down payment, just take over ownership. Is that for real or is that a scam or is there a lot more to it than that. I just want to know if its a legitimate thing to do.
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ranger_co_1_75 Says:
February 28th, 2009 at 1:25 amVisit ranger_co_1_75
Brigantine real estate
If you go through escrow, and appraisal, where title searches are made, and you find out about hidden ownerships, liens against the property, second or third mortgages and if the house is mortgaged for more than it is worth.
If the house isn’t mortgage for more than market value, and If the title is clear except for the primary mortgage, then you can get good deals from people who have lost their job and can’t afford the mortgage payment. They want someone able to refinance the loan take the house so they protect their credit, so they can buy a house when they get a job again.
Basically, they give you the equity they built up in the house.
TaylorProud Says:
March 2nd, 2009 at 1:17 pmVisit TaylorProud
Paper Shredding
make sure everything is legal and in writing…
also what happens if the owner Dies??????
or becomes incapciated? Does the home become part of his estate?
Steve D Says:
March 2nd, 2009 at 2:20 pmVisit Steve D
walk in bathtubs s
Most likely not a good idea. There is a good possibility that the old owner couldn’t refinance because the house/mortgage was upside down (mortgage larger than the market value of the home). Otherwise, the old owner would have sold the house and taken the profit or the bank would have foreclosed, sold it at a profit and taken their money out.
In addition, taking over the payments is considered an assumption. There are very few loans nowadays that allow for loan assumption.
Alternately, you can use a land trust. From Wikipedia:
Land trust
Main article: Land trust
Land Trusts have traditionally been used as a non-profit entity to own property. In recent years, many companies have developed methodologies that allow for Land Trusts to be used to acquire properties in foreclosure allowing homeowners to save their homes and making it possible for investors to see incredible returns. In a Real Estate Investment model Land Trusts bring ease to the transaction. While some people believe that using a Land Trust also brings a benefit of not causing Due-on-Sale clauses to force the refinancing of the subject property, this is only true when the borrower is and remains a beneficiary of the trust and which does not relate to a transfer of rights of occupancy in the property. While the use of Land Trusts by real estate investors does make it more difficult for a lender to discover a transfer has occurred, the loan can still be accelerated if it is discovered since a transfer has occurred.
Note the very last line on accelerated payments - that means that if the bank finds out this has been done, it can call the loan.
annazzz1966 Says:
March 3rd, 2009 at 10:15 pmVisit annazzz1966
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It could be a scam and here’s why. Most mortgages these days are not paid in full and are not assumable, so you are not allowed by the lender to take over the payments. You’d be throwing your money down a dark hole and never seeing any property in return.
The other issue is that there are a great many vacant houses now and you could be enticed to “rent-to-own” one of them from a squater/scammer. If this happens, you can be evicted from the home and again have nothing to show for it in the end.
Buyer beware. If it seems too good to be true, it probably is.
quickmls Says:
March 5th, 2009 at 3:00 pmVisit quickmls
Thermage
It is possible to do it, but you need to be careful who you are dealing with. There are a lot of people who are trying to do this as an investment strategy who do not have a lot of experience, and you may end up with a bit of a mess if done incorrectly.
Rent to own is different from taking over payments. Taking over payments is possible, but there are some dangers (see below). If you get the Deed, but are not on the mortgage, it’s dangerous to the Owner. If the Owners have the Deed and you have only a rental-type or purchase agreement, it’s dangerous to you.
Rent to own/ Lease Purchase / Lease Option are all similar. In a rent to own, which is a more general term, you would have a contract with the owner that says “I will rent your house; and at some point in the future I will buy it”. Some people use the terms interchangeably, but you need to decide whether what you are looking for is:
a) a Lease Purchase - where you are obligated to purchase the house - normally you would have a separate Lease and Purchase contracts, but in any event, it is a firm contract stating that you WILL buy the house at a particular time, and at a particular price; or
b) a Lease Option - where you have a lease, and a separate Option contract, which gives you the right to purchase the property, but not the obligation (you could walk away at the end of the lease by not exercising your option).
In both cases, however, you would normally need to put down some money as Option Consideration, which is not refundable. If you do not buy the house, you lose that “deposit”.
Things to watch out for: If the house has a mortgage, the mortgage company can call the loan due if they find out the owner has transferred any interest in the property (invoke their “Due on Sale Clause”). If the owner is still on title, they can still borrow against the property, or put liens on it, and any liens or judgments that they get against them may attach to the property, so even if you did everything right, you may still have a problem buying the house later because of the title issue or the amount owed on the house. The owners may get divorced, file bankruptcy, or pass away during the term of your lease, all of which can affect not only the title but the contracts. The value of the property may drop, so the price you agreed on may no longer be what you are willing to pay when it’s time to buy.
Many of these issues can be resolved, but it would take a book to explain them all! I hope I have given you some food for thought, though! If you are seriously considering this, to me the most important thing would be to make sure the title is protected (from both the Owner and you) by putting it in a Trust or other vehicle, and that a neutral third part (attorney, title company) is involved to manage all the moving parts.
cougar Says:
March 5th, 2009 at 7:11 pmVisit cougar
Chicago Real Estate
I can be a good idea, but as real estate values are declining in todays market, be very careful. Most rent to own or lease purchase options which is really what they are, require an option fee or down payment when the lease is signed. Typically you would pay a little higher rent than normal with a portion of the rent going into the same interest bearing account where the option fee or down payment is being held. Most lease purchase options are designed for the landlord or property owner to profit from a property that may be otherwise hard to sell. Typically they will put an establish sales price in the lease purchase option agreement that is for more than they can sell the property for now. If values continue to decline and say that in 24 or 36 months or whenever you are supposed to execute the purchase part of the option contract, each contract is different, depending on the agreement, you will be obligated to purchase the property at that price. Almost all of these types of agreements state that if you elect not to purchase the property at the pre determined price in the option agreement contract, the your lease purchase option down payement and all monies paid above the normal rent to be held to go toward the purchase, will become the property of the property landlord and or owner. Be very careful, these are used alot to attract people who have saved up some money toward a purchase, but may not have good enough credit scores to buy. Check with a bank or credit union that does FHA loans, you may qualify to purchase the property up front and get a much better deal. Good Luck