Home Owners- Would you consider this? - Page 2

[karne]

I'm not sure how much this would actually help someone facing forclosure because in the end, there's no guarantee that you would follow through on payments. Maybe it's a quick fix, but I'm not sure it makes sense? Ok-and if you are essentially paying the motgage, that price includes interest. Is it acceptable to be paying interest via a third party?

If your goal is to get into a home it seems that creativity might be necessary. Your situation seems like one where a multigenerational situation could work-could your family and one of your sets of parents split the cost of a home, and at a certain point you could buy out the other owners? Or would a two family work in which you and another family fully purchase the property? Just thinking here. This must be quite a challenge for you-I admit my eyes are really opened here!

[chimomma]

hmmm... I guess I don't see why people feel there is no way to know if some one is going to pay....well, how does a bank know if you are going to pay? They can't for sure, of course, but we would submit to a credit check, employment varification, income varification, criminal background check, what ever else in the world some one would want to look at to see if we would be trustworthy, the same way a bank does. I do see how it would be more difficult for an indivual to deal with a default than it is for a bank, but I am not expecting it to go down on a smile and a hand shake.

I guess the way I see it if I was facing foreclosure and sold my home to some one this way even if they defaulted down the line, having some one pay off a third, or half, or three fourths of my mortage and then returned my house back to me doesn't seem like a bad deal at all. It would seem like one of the best things that could happen.

I would consider buying a two family home, but most likey would still need to pay in installments even then. And one of the levels would probably be for inlaws who we support financially, so no, they won't be of any help money wise, we make more money then any of our family.

There are other creative solutions but seem less viable. Like for example we have had friends borrow money from several different people and pay cash for a house. This is unusaly and sparked a government investigation into where the money came from, which in turn sparked an IRS tax audit for all people who put in money becuase the government also wanted to make sure they got their cut from the people who had $10,000 laying around to let a friend borrow. So most people are not eager to do that.

In terms of paying for some one elses interest based mortage, yes that would not be a good thing to do. The sale would have to be directly between buyer and seller and the bank doesn't enter into the contract. The buyer is paying the seller for his house and what ever the seller did is not the business or responsibility of the buyer. Because the contract is between buyer and seller not buyer and seller's bank. I suppose it could be questionable to then enforce the seller to pay the mortage, it would be worth looking into further from a religious veiw if you could put on paper that they have to pay it.

[mattemma04]

I would not allow anyone to make payments to me for a home I was selling.We had a hard enough time getting people to pay monthly for a car.

When I sell something now I want the money-all of it-and I don't care how the buyers get it to me as long as it is one lump sum.

Banks have insurance and can take the home easier than I could if someone stopping making payments. If I accepted payments and they stopped I would have to pay lawyers and go to court.Who wants to deal with that?

[newbymom05]

I'd do it as a lease/purchase, but only on investment property. I think in this economy you'd be able to find investors willing to do it. I think that's the way you need to approach it: not whether someone will inflate a purchase price and loan you money w/ no interest, but rather will someone agree to a lease/purchase agreement. The former sounds sketchy (no offense), the latter like a reasonable business decision.

[Kristine233]

If someone defaults on paying the bank, the bank isn't going to lose everything, they don't have just 10k aside, they have hundreds of thousands in a cushion. If a buyer defaults during a private purchase the previous owner could lose everything, even with a cushion. Not to mention its going to look like 2 mortgages on the seller's credit report and if they want to finance something in the future they might not be able to. What would happen if the buyer went through hard times and trashed the house and left? Its not hurting the bank, its hurtng the sellers, they may have a cushion to pay the mortgage but the repairs on the home could wipe them out or make the house unsellable.

We do have "contract for deed" here and my ILs are actually buying a 2nd property to do this with. The owners have a house they "rent" out to the buyers. The "rent" goes towards the purchase price on the house. If they default the original owners reclaim ownership. Its very similar to what you are talking about. But IMO the first owner of the homes should be in a position where they CAN make two mortgage payments just in case the transacton goes awry. I personally wouldn't do it, but there are people who do.

[chimomma]

Originally Posted by newbymom05

I'd do it as a lease/purchase, but only on investment property. I think in this economy you'd be able to find investors willing to do it. I think that's the way you need to approach it: not whether someone will inflate a purchase price and loan you money w/ no interest, but rather will someone agree to a lease/purchase agreement. The former sounds sketchy (no offense), the latter like a reasonable business decision.

I agree, it is important to call it something that sounds more normal... that's why I was saying seller financing, but to some people when they hear the word financing, they think loan. I don't really think or describe it as a loan, because nobody would be giving me any money, just selling me something.

Is a lease purchase agreement the same thing as rent to own? Like I mentioned before, I am also not allowed to do rent to own because we cannot have two contracts for the same thing. So we couldn't be under contract to rent and buy it at the same time. But I would imagine some one willing to do rent to own would also be willing to do what I was describing because it is not very different, just changing the way the contract is spelled out.

[chimomma]

Originally Posted by Kristine233

If someone defaults on paying the bank, the bank isn't going to lose everything, they don't have just 10k aside, they have hundreds of thousands in a cushion. If a buyer defaults during a private purchase the previous owner could lose everything, even with a cushion. Not to mention its going to look like 2 mortgages on the seller's credit report and if they want to finance something in the future they might not be able to. What would happen if the buyer went through hard times and trashed the house and left? Its not hurting the bank, its hurtng the sellers, they may have a cushion to pay the mortgage but the repairs on the home could wipe them out or make the house unsellable.

We do have "contract for deed" here and my ILs are actually buying a 2nd property to do this with. The owners have a house they "rent" out to the buyers. The "rent" goes towards the purchase price on the house. If they default the original owners reclaim ownership. Its very similar to what you are talking about. But IMO the first owner of the homes should be in a position where they CAN make two mortgage payments just in case the transacton goes awry. I personally wouldn't do it, but there are people who do.

I guess when people mention concern about the buyers walking away and trashing the place... I suppose in this situation it would be a little like screening tentants, you make a judgement call. You can't be ceratin, but if you have the feeling your renters will be the type of people to destroy your property or not honor their lease agreement, you will probably avoid renting to them.

Same thing here, you would have to judge whether or not you think the people are honnorable that they wouldn't do something like that. And back it up with evidence as much as you can. In our case you have a family with kids, been in the community several years, have a stable income, and jobs requiring lots of responsibilty, good credit, are worried enough about their religious commitment not to engage in certain business transations, wouldn't you think that might also prevent them from not honnoring their contract if they are able to honnor it, or destroying some one's property? Of course there are no gaurentees, but their are certain indicators.

[pumpkin]

Absolutely not. Our home is our biggest asset and we simply could not afford the risk.

[lucyem]

We would. We advertise that we would. We bought a house to get access to landlocked land we owned and then the economy tanked and we have this very nice house in the country (pretty white cape, 3 bedrooms, just under 4 acres)

I am serious, we would. But many people are in no position to sell a house this way so your options are limited.

[annethcz]

My list is similar to cristeen's. I'd need to own the house free and clear, and have an iron-clad contract in place. There is NO way I would do something like that if I still had a mortgage. As others have said, even if the prospective buyer appears to be a trustworthy person, if they default, it would create a personal crisis for me.

I know a few people who have bought properties contract for deed. For the most part, those contracts have worked out well. It's very important to find a good lawyer.

[SleeplessMommy]

many people are in foreclosure due to unaffordable housing - for example they owe $300,000 and house in now worth $200,000. lets say their mortgage payment is $3000/mo and fair market rent is $1800 per month. Would you pay $3000 per month plus all maintenance costs to take title of the house in 15-20 years?

I would go with Texmati's idea.

[2cutiekitties]

There is absolutely NO way I would do this. When I sign those papers, that is it I am done.

I also want to point out that if you win the lottery, you can either take yearly payments and get the full amount over a 20 yr period, or you can take a big cut and get it all at once. Most people cash it out immediately.

[anj_rn]

I know several people who have done it. The contract is a rent to own contract with a down payment (doubles as security deposit) and a set monthly limit. Until the final payment is made, the "potential buyers" are actually renting the property. The title is transferred at the time of the last payment. The contract specifically bids each party to what they are responsible to payfore. The original owners must maintain homeowners insurance and the new buyers must maintain renters insurance. There is a financial penalty for failure to uphold either end of the contract.

The sellers get more money, don't have to pay the real estate agents (they are paid by the buyer), and if the buyer backs out, they get the house back (no refunds). The buyers get the house, time to pay, and no loan.

My friend is doing this. They opened an account at the same bank as the buyers and the buyers directly transfer the money into the account. That way there is a record of the payments. She chose to do it, but the buyers were already renting the house and could not get approved for enough of a loan. It covers her mortgage, plus a little and strengthens her credit. However, she has enough in savings to cover 6 months of the mortgge if they were to default.