Moratorium on Foreclosures for Christmas

Source: https://thinkrealty.com/moratorium-foreclosures-christmas/

Fannie Mae and Freddie Mac announced the second week in December that both GSEs would, as is traditional, place a hold on holiday evictions lasting from December 18, 2017, to… more

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Are you contemplating investing in real estate? But you do not have enough cash to do this. In this article is a tip you are able to 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 wager is to find a property that the owner has great interest in offering it, 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 your landlord would be happy to help you out! There are a few variations that can be used depending upon you and your seller. Do they need the market price or are they just desperate to get out from the monthly payments – maybe facing foreclosure?

The easiest method is to consider taking over their mortgage obligations – 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 repayments while the property stays in the seller’s name.

You take over the original mortgage and get a 2nd 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. Instead of having the money stay 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 should be able to refinance the cost, or you could sell. Unless you struck an actual bad market the value of the property should have risen by then.

A lot of mortgage lenders merely need to make a good investment. While your local bank may still be lacking confidence there are plenty of financial lenders that would wish to make a deal. Financiers like real estate. The mortgage is usually based on 60-70% of the value of the property, so as long as they understand they get their money back in the value of the estate if you default, they don’t care what kind of revenue you make. Complete the deal with a second mortgage done with the seller. In case you default they could still foreclose on the property and sell it, paying off the existing mortgage in the proceeds.

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

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