A Power of Attorney (POA) is the written authority for an “agent” to act on behalf of someone else. This means that if you need to get something done while you are out-of-town or incapacitated in some way, you can still reach your goals. I have used a POA mostly for real estate transactions. Since […]…
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Are you contemplating investing in property? However, you do not have enough money to accomplish this. Right here is a tip you can use as long as the property seller is willing to negotiate along.
To be fair, not all sellers will be interested (or even understand) the concept outlined. Your very best gamble is to locate a land that the owner has great interest in selling, whether because they are moving, a divorce settlement, or frustration with the folks renting the property.
Actually, if you maybe currently renting and considering using this approach perhaps your landlord would be happy to assist you! There are some variations that could be used depending on you and your seller. Do they want the market price or are they just eager to get out from the monthly payments – maybe facing foreclosure?
The simplest way is to consider taking over their mortgage payments – called ‘assuming’ the mortgage. You will have to be approved by the original lender to assume the mortgage. If you can’t get approved for an assumable mortgage you could also try a ‘subject to’ assumption where you merely make payments while the property stays in the seller’s name.
You take over the original mortgage and make a second mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time frame – two or three years. Instead of having the money stay in a bank they could be getting a high interest over two or three years with the remainder due in full at the end of the term.
When the term ends you should be able to refinance the cost, or else you could sell. Unless you struck a real bad market the value of the property should have risen by then.
A lot of mortgage lenders merely want to make a great investment. While your local bank may still be scared there are a lot of financial lenders that would wish to make a deal. Financiers like real estate. The mortgage is usually around 60-70% of the value of the land, so as long as they know they get their money back in the value of the property if you default, they don’t care what sort of income you make. Complete the deal with a second mortgage done with the seller. If you default they can still foreclose on the property and sell it, paying off the existing mortgage with the proceeds.
Now you can see the entire picture. It is better that seller and buyer can work together. In the event that they can’t wait for a sale, you may still give them their initial price with a little versatility on their part.