Home Buying in Orange>Question Details

Dana, Home Buyer in Orange, CA


Asked by Dana, Orange, CA Sat Aug 16, 2008

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Although I am starting to hear of people who want to do this type of deals, I will briefly explain how it works and the pitfalls.

The 'take over payments' plans usually involve the use of an AITD (all inclusive Trust Deed) or wrap around loan. We have not seen these in the market place for a long time, since money was easy to get and home prices/values were going up rapidly. Here are the pitfalls.

1. For the past 20+ years lenders have NOT been writing assumable loans. Any transfer of a beneficial interest in a property can trigger the 'due on sale' clause. This could leave you in a place where you paid a down payment, several months of payments on the loan, and then get a notice from the lender of an acceleration of the balance of the loan due to the 'due on sale' clause. If you could not refinance the home at that time, you could lose your out of pocket money AND the home.
2. Many loans these days are NOT 30 year fixed. You could get into a situation where the underlying note adjusts and you can no longer afford the payments. If you could not refinance ... (same conclusion as above).
3. Some loans these days are negative amortization loans. When the limit of the loan is reached, these loans will recast resulting in significantly higher payments. If you could not refinance ...
4. Many homes have loans that are greater than the value of the home. You could end up paying much more than the home is worth in this market.
5. Since most loans are not assumable these days, the original owner of the house remains obligated under the existing loan. This means it shows on their credit report as their obligation and limits their ability to make future purchases.
6. People with equity in their homes and a home that will actually attract offers from the general public will not want to stay obligated under their loans.
7. Usually these deals involve you paying the current owner and they are responsible for paying the mortgage holder. If the owner does not make the payments to the lender you could end up with the property going into foreclosure. If you could not refinance ...
8. To avoid #6 above, if you can find this type of deal, make sure you are paying your payments to an escrow company, property management company, etc, who deposits the funds into a trust account and disburses them based on signed mutual instructions from you and the seller.

All that being said, if you can find someone who is willing to do this type of sale, make sure that you are represented by a great team who will protect your interests. This team should include your trusted attorney to review all documents and deal points. Adding a great real estate professional who will insure that you get all the required disclosures from the seller and negotiate on your behalf, would also be beneficial.

On the other hand, if you are a first time home buyer with little money for down payment and marginal credit, you may qualify for city, county, state and federal programs that would allow you to buy a home without the headaches and concerns addressed above. Please contact me if you would like to discuss either 'take over payment' properties or assistance for first time homebuyers. It would be wonderful to see you in a great home soon. Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
2 votes Thank Flag Link Sat Aug 16, 2008
Are you still in this? I'm desperate to get out of rent as I've paid a great deal and want to get onto my own land. John
Flag Fri Oct 9, 2015
Interested in take over program. Sabrina at 267-444-9046
Flag Mon Jan 26, 2015
saw your article on take over payment. I'm interested, please call me at 267-226-9694
Flag Wed Aug 27, 2014
Looking to take over mortgage payments in costa mesa and or surrounding areas.
0 votes Thank Flag Link Sat Dec 7, 2013

This practice is RARELY done. And if done, should be done with extreme caution.

My broker used to refer to this practice as "subject to foreclosure"

If the homeowner is in trouble the bank can and will move ahead with the foreclosure process.

There are plenty of other ways to get a good deal on a home.

Kawain Payne,Realtor
0 votes Thank Flag Link Tue Nov 19, 2013
I dont know where to go to look for homes
0 votes Thank Flag Link Sun Aug 25, 2013
senmy list for houses granada hills
0 votes Thank Flag Link Mon Dec 31, 2012
missouri city, texas is where i want to live
0 votes Thank Flag Link Sat Mar 17, 2012
Assumable loans are rare at this time, but few do still exist. Talk with an experienced Realtor agent in your area who will advise you on how to find such a property on the MLS or otherwise that is reasonably "for sale". search for someone with a lot of equity and willing to carry the note.
0 votes Thank Flag Link Sun Jan 22, 2012
My grandmother carried the loan on a home she had in Utah about 5 years ago. All was well for about a year, then the guy stopped paying the payment. It was a nightmare and it took them several months to effectuate a foreclosure and then an eviction.

On the other hand, my parents bought a home for my sister, she started paying the payments directly to the bank after about a year, and then was able to finance into her name after a year of making payments. But it's a big difference between family.

Too hard to find an ideal home for something like this for a buyer - too risky for a seller... too much could go wrong.

Possible alternative: find an investor, friend or relative who would help you buy and enter into a "shared equity" transaction with them.
0 votes Thank Flag Link Sat Jun 11, 2011
On the contrary---it would be desireable if they loan you would wanto take over is assumable but to do the deal it doesn't HAVE TO BE. Basically you get the title in your name and start making the payments. That's most of what there is to it. You don't need a lawyer, agent or anything else. They are just trying to make you paranoid.
0 votes Thank Flag Link Mon Jan 17, 2011
Your better bet is to find an owner who is willing to carry the note--less risky. If you decide to do a deal where you take over payments, make sure you understand all the legal ramifications. As stated below, lenders are not writing assumable loans. If the owner of the home defaults on the mortgage (since he remains responsible for the loan) then you could lose everything you have put into it, AND the house.

0 votes Thank Flag Link Sun Jan 16, 2011
I located a nice take over payments home at owner will carry on the web. However, be careful and check to see if there has been a notice of default, if county taxes are due, if there are liens. Go to a title company and have them run a property profile (free) or a preliminary title report.
0 votes Thank Flag Link Sun Jan 16, 2011
If anyone knows of a home that I can take over payments, please let me know. I have 10% down if necessary. Looking for a SF 3 to 4 bed, 500k to 700k home in CA from LA south to SD.

email: products2009@hotmail.com
0 votes Thank Flag Link Wed Sep 29, 2010
Very rare today with the lenders. In the 70's there were lots of assumable loans but today you would have to be very creative. Some builders offer financing that might meet your criteria.
0 votes Thank Flag Link Tue Feb 16, 2010
Dana ... Your question is "Where do you find a take over payments home"?
That's a good question and of course depends upon the area where you want to find a home. So the first thing is to decide where you want to buy, then scour the newspapers and Craig list and other such means for owners to get their information out.

Also talk with an experienced Realtor agent in your area who will advise you on how to find such a property on the MLS or otherwise that is reasonably "for sale".

Along the way, hire a qualified real estate advisor who will fill you in on the legal complexities of where you are going with this.

Some other answers here dealt mistakenly with whether or not it is a good idea to buy a take over payments home.

Best wishes.
Harrison K. Long, Realtor agent and Broker, Coldwell Banker Previews, Irvine, CA.

For an excellent home search site check out
0 votes Thank Flag Link Wed Jan 14, 2009
I did a "takeover" the payments in 1997. Best thing I ever ever did. I made the payments on time. I called the electronic voicemail to make sure the money was credited every month. I refinanced after three years.

Everyone kept telling me how "awful" this was to do. They keep saying the bank can call the loan. Yes, they can. I am a California real estate broker too. The question you have to ask yourself is.....do the banks want the house? Especially today. The loan I tookover in 1997 was at 10% interest and it was 13 years into the loan. The going interest rate then was lower than 10%....I made the payments on time. What bank wants to call a 10% loan????? They couldn't get 10%. I was paying them 10%.

Today, the rates are very low. If you find an 8% loan to take over....ask yourself.....does the bank want to own this property? Is there such a tremendous amount of equity here that the bank wants this property? It costs the banks lots of money to get rid of the inventory they do have.

We in the real estate business are scared to death of anything out of the ordinary. A lot of agents don't know the details of the "subject to" process. A lot of them think they know it because it's "what they heard".

If you think you can make money by renting out the house or by fixing it up or you can live in it cheaper than renting, then go for it.

I tookover a $29,000 loan on and gave the "seller" $4000 cash to get it. So the purchase price was $33,000. (yes, folks, that was in CALIFORNIA) I fixed that one bedroom condo up over 9 years. I sold it for $225,000. It cost me $8000 for the stuff to remodel it. The payments on it were $244 a month. I could not rent anything cheaper.

I CAN'T WAIT TO DO THE NEXT ONE. The banks COULD call the loan......but the economy was way better in 1997 and all the way up to 2000 nobody called my loan. I have heard this time and again from investors.

0 votes Thank Flag Link Mon Jan 12, 2009
The only answer to this situation is a Trust Conveyance. If you do anything else it might cost you if the lender calls the loan when someone other than the origional owner is on title.

The trust conveyance is a way that is legal an accepted by the California and National Association of Realtors. It would take some time to get you up to speed but it can be done legally.
Web Reference: http://www.markandtim.com
0 votes Thank Flag Link Sun Aug 24, 2008

You can accomplish your goal with a "Land Trust" contract and be safe that the bank will not accelerate the loan. I have a company that does this quite well. Please contact me for the details.

Joe Homs
Web Reference: http://www.joehoms.com
0 votes Thank Flag Link Sat Aug 16, 2008
In the past several years, and probably still, it is difficult to find a home that you can simply take over payments. The homeowner must have an assumable loan and most of them are not assumable. If you take over a loan that is not assumable, and the banks get wind of it, the can 'accelerate' the loan (call it all due and payable).

Why are you looking to simply assume payments?
0 votes Thank Flag Link Sat Aug 16, 2008
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