Chito.erika, Home Buyer in San Diego, CA

How can i take over a home payment?

Asked by Chito.erika, San Diego, CA Thu Feb 2, 2012

I ha this person the dont want too looss his home and ask me to get for mi but i dont know how to do this

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5
Cory La Scala’s answer
There are a couple of things you need to do. First, you need to know if you qualify for a loan, and what type you'd qualify for. Then, you'd need to find out if your friend has an assumable loan.

But before this, you need to find out if your friend is behind on his mortgage payments and by how much. And, if he's underwater on his loan, you would want a new loan at current market value, right? If he's current on his loan and it's not underwater, then you could always just buy it from him with your own loan.
0 votes Thank Flag Link Fri Feb 3, 2012
Most loans today are not formally assumable. Those that are require the same qualification process as a new loan. Rates are better now than they have been for most of our lifetimes. If you can't qualify, you can agree with the seller to make the payments and create an AITD or wrap around mortgage or buy the home on a contract for deed. There are some potential risks and limited sellers who would be open to this. Give me a call and I will be happy to discuss in more detail creative finance options and what the risks are.

JIm Fishinger
760-518-3994
1 vote Thank Flag Link Fri Feb 3, 2012
Talk to a local lender. But, why would you want to take over a mortgage if the person is about to lose their home? You would first need to bring the mortgage current, in other words, pay all the past due payments and penalties. Is there any equity in the home? If not, then you would be agreeing to pay the bank more than the house is worth. I would suggest your friend talk to a local realtor who is an expert in short sales and foreclosures before doing anything else. Sometimes it makes more sense to walk away from the home than to stay.
1 vote Thank Flag Link Fri Feb 3, 2012
Hey Chito,

The best place to answer this directly is the lender where your friend currently has the outstanding mortgage loan. In general, mortgage companies typically do not allow assignment or assumable loans, however with mortgage rates so low now, I'm sure they would gladly assign you a mortgage at a higher rate than the current market rate.

You need to determine if this makes sense for you. It might be in the best interests of you and your friend to rent the property instead of assuming the loan.

As noted in the other answers below, it may be likely the market value of the home is below the price your friend purchased the home for, in which case - I would highly recommend avoiding an assumable loan, you will be buying a home with negative equity, which means, unless the market rebounds by the time you sell, that you may be liable for paying the difference or negotiating a short sale with the bank in which case your friend could possibly be attached to that still liability as well. That also work vice versa if the home is worth more that the loan amount!

Here are some websites that may help you:
http://mortgagefiduciaries.com/2011/06/newest-scam-assignmen…
http://www.mortgage101.com/article/drawbacks-of-assumable-loans
http://www.investopedia.com/ask/answers/05/assumablemortgage…

Here are my recommendations:
1. Find out from lender if they do assignable or assumable loans
2. Ask a Realtor to value the home based on comparable sales in the area, many realtors may to this free
3. Sit down with an attorney familiar with the real estate industry to determine the best deed terms
4. Why not consider renting?
5. A short sale may also be a viable option for your friend

Hope this helps!
Best Regards,

Steve
0 votes Thank Flag Link Fri Feb 3, 2012
There are good points raised below:

First, as Suzanne points out, you would not want to do that unless there was equity in the home. Example: The home is worth $200,000. The owner owes $125,000. That means there's $75,000 worth of equity. Then it could make sense for you to take over the payments (and get the deed).

On the other hand, if the home is worth $200,000 but the owner owes $250,000, then the house is what's called "upside down" or "under water." If you took over payments and acquired the deed, you'd be overpaying by $50,000. Not a good idea.

If there is equity--if the home is worth more than what's owed on it--then Jim makes some good suggestions. However, I'd recommend what's called a "subject to." That is: You buy the house "subject to" the existing mortgage. Here's how it works: The owner deeds the house to you. You agree to make his payments. At some point in the future, you refinance the house, so the new mortgage is in your name and the previous owner is off the mortgage. That's a lot safer for you than a contract for deed or wrap mortgage.

Go to a good real estate lawyer. Explain the situation. Determine how much the owner owes, and how much the house is worth. The lawyer can help you from there. And none of those approaches--a subject to, contract for deed, or wrap mortgage--is too expensive. The subject to is actually quite inexpensive, and (if there's any equity) that's the one I'd probably recommend.

Good luck.
0 votes Thank Flag Link Fri Feb 3, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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