How Tax Reform Could Affect U.S. Homeownership

Source: https://thinkrealty.com/how-tax-reform-could-affect-u-s-homeownership/

Will President Trump’s tax reform proposal put a major dent in the housing market? Some experts say by doubling the standard deduction, the mortgage interest deduction will lose relevance because… more

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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 may use as long as the property seller is willing to negotiate with you.

To be fair, not all sellers will be interested (or even understand) the concept outlined. Your very best wager is to locate a land that the owner has great interest in selling, whether because they are moving, divorce, or frustration with the people renting the place.

Actually, if you are currently renting and thinking about using this approach perhaps the owner would be happy to assist you! There are a few variations that can be used depending on you and your owner. Do they desire the market price or are they just desperate to get out from the monthly payments – perhaps facing foreclosure?

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

You take over the first mortgage and create a 2nd mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time period – 2 or three years. Instead of having the money sit down in a bank they could be collecting a high interest over two or three years with the remainder due in full at the end of the investment term.

When the term ends you need to be able to refinance the cost, or else you could sell. Unless you struck an actual bad market the value of the home should have risen in that time.

A lot of mortgage lenders merely want to make a good investment. While your local bank could still be lacking confidence there are a lot of financial lenders that would want to make a deal. Financiers prefare real estate. The mortgage is usually based on 60-70% of the value of the land, so as long as they understand they get their money back in the value of the property if you default, they do not care what sort of money you make. Conclude the deal with a second mortgage done with the seller. If you default they can eventually foreclose on the property and sell it, settling the existing mortgage with the proceeds.

Now you can observe the complete picture. It is good that seller and buyer may work together. If they can’t wait for a sale, you can still give them their initial price with a little versatility on their part.

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