So all in all, not a slam dunk take over payments and you own the house. Plus if you are an investor, and there is a notice of default filed on the property, be really careful when dealing with owner occupied homes. A lot of pitfalls many don't even know about.
There are ways though if you can't afford the down, or can't quite quality that in some cases an "equity share" arrangement that can work but needs a very carefully crafted agreement - by an attorney.
VA loans are assumable without qualifying. The Vet loses their ability to use their VA loan again until that assumed loan is paid off.
Other than the urban legend that you can do it, for the most part, you can't. You can make payments and take title but it's at the risk of foreclosure from the servicer of the loan for the breach of contract. You do it subject to default by the lender.
Rent a home or save up to buy one. There aren't any shortcuts and all of the "investors" telling you they do this every day, just haven't had one taken from them yet. Key word being yet.
If the loan is adjustable it is most likely assumable but it must be taken over through a formal assumption meaning that you will need to qualify to take over payments through the recordation of a new trust deed and grant deed showing your name as the new owner of record.
The only way I know of that you could hold an ownership interest in a property without qualifying for a formal assumption is when the property goes to foreclosure on a second or third trust deed that defaulted. You attend the trustee's sale and bid an amount to satisfy the second trust deed. When a second trust deed is purchased through a trustee's sale it will be "subject to" the first trust deed. Meaning that you will now be responsible for the first trust deed and its terms and conditions just as if you were the original borrower. No qualifying needed. And you are the new owner of record too.
There is so much information available regarding foreclosure sales and what they entail, what to look out for and how best to understand the whole process. Consulting a real estate attorney regarding these issues is always your best bet so that you are ensured of the most accurate information available in your state.
I hope I helped a little instead of confusing you even more. Good luck in your house hunting and all that entails.
Diane Wheatley, Broker
...and state law has nothing to do with this. It's lender guidelines that dictate what is allowed.
While there are a few unique loan types that are assumable (VA for one), 99% of loans out there have specific language in the terms of the note and deed of trust that prohibit transfering ownership without the express written authorization of the lender. That could trigger a default and possibly cause the lender to initiate foreclosure proceedings. "Could" and "Possibly" are the key words here that need to be taken into consideration. We as lenders could accelerate the note. Will we? Well, you could do what you thinking about doing and see what the lender says. I personally wouldn't try to work around the system or the lender. If you are serious about doing it, work with the lender, not behind their back and see if they have any programs that would allow you to do so.
This is often done with divorces, with inter family transfers, with transfers to heirs prior to death and of course to avoid foreclosure.
If you are still interested, I recommend you continue the learning process with a title attorney and not a Realtor.
Just think about it. If your home is in pre-foreclosure and you know somebody with poor credit, no money and a small income who "thinks" they can afford the mortgage, how would it make any sense for a lender to accept them in place of you?
Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist
J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526
Phone (925) 997-1585