0066 Obtaining A Mortgage, The Rules Of Engagement (Part 1)

Source: http://youtu.be/UgUAcprWqIY

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Are you thinking of investing in property? However, you do not have enough money to do so. Here is a tip you can use as long as the person selling the property is willing to negotiate with you.

To be fair, not every seller will be willing (or even understand) the concept outlined. Your very best gamble is to locate a property that the owner has great desire for selling, whether because they are moving, divorce, or frustration with the people renting the place.

Actually, if you maybe currently renting and considering using this technique perhaps your landlord would be happy to help you out! There are a few variations that can be used depending upon you and your owner. Do they need the market price or are they just eager to get out from the monthly payments – maybe facing foreclosure?

The simplest method is to take over their mortgage repayments – called ‘assuming’ the mortgage. You will need to be approved by the original lender to presume the mortgage. If you can’t get approved for an assumable mortgage you may also try a ‘subject to’ assumption where you merely make repayments while the property remains in the seller’s name.

You take over the first mortgage and create a second mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time frame – two or 3 years. Rather than having the money sit down in a bank they could be collecting a high interest over 2 or 3 years with the rest due in full at the end of the term.

When the term ends you ought to be able to refinance the cost, or you could sell. Unless you strike a genuine bad market the value of the property should have risen in that time.

Most mortgage lenders merely need to make a good investment. While your local bank may still be lacking confidence there are lots of financial lenders that would like to make a deal. Financiers like property investing. The mortgage is usually around 60-70% of the value of the property, so as long as they understand they get their money back in the value of the property if you default, they don’t care what kind of money you make. Conclude the deal with a 2nd mortgage created with the seller. In case you default they can still foreclose on the property and sell it, paying off the existing mortgage with the proceeds.

Now you can observe the whole picture. It is good that seller and buyer can work hand in hand. In the event they can’t wait for a sale, you could still give them their initial price with a little versatility on their part.

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