Buying from a friend (no realtor) and without mortgage payment

Asked by 1st Timer, 55442 Tue Oct 6, 2009

I plan to buy my first home from a friend without a realtor and I don't have to get the mortgage. But I know my friend still has the mortgage more than $200,000. What should I do next and what fee that I need to pay? A title company or a real estate lawyer or the bank which has a lean on that property? Who should I talk to at this point if you can recommand? Or should I get a little amont of mortgage from the bank?

Thanks-

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12
Elizabeth Fu…, Agent, Wayzata, MN
Tue Oct 6, 2009
I suggest you use a title company to do the closing. They will make sure that everything against the property us searched and that title is clear. You could also ask the seller to provide you with an owner's policy. I think using a title comnpany to do the closing will keep things clear as to what can be done legally with that mortgage and the exact poay-off amount, whether it is transferable and what your new lender, if one is needed, requires. You will also need a legal purchase agreement. If you have other questions, feel free to call me at 612-986-4105 and we can chat.
1 vote
Mnboy, , Minneapolis, MN
Wed Oct 7, 2009
I think you should start over, the mortgage may be higher and a lot higher than the value of the house.
So much for friendship. Gives us the Zip Code, beds and baths We can give you a rough Idea of the comps.
It will cost you at least 1400 a mnoth plus utilities. There could be liens, who knows what.
Web Reference:  http://www.hansne2hansen.com
0 votes
Kim Eisen, Agent, Twin Cities, MN
Wed Oct 7, 2009
PLEASE disregard the last response from Suzanna. She may have mis-read your question. Your friend already has an underlying mortgage that needs to be addressed and if you do a contract-for-deed and the current loan company finds outs it has been sold and it was not an assumable mortgage they could call the loan due and payable 'Acceleration Clause' and it's not a situation you would want to be in. Again, call an attorney NOW.
0 votes
Suzanna Sank…, , Minneapolis, MN
Wed Oct 7, 2009
1st time buyer,

You can purchase this home from your friend without getting a mortgage! This process is called Contract for Deed. This contract can be written up several different ways, some important things to include are:
1.) Your final purchase price
2.) Your monthly payment
3.) Term of loan (for example, I purchased my 1st home contract for deed on a 3 yr balloon. This meant I made payments to my seller and my seller made payments to her bank. The contract expired in 3 years, where I would then need to extend the contract with her or obtain my own mortgage and pay her off.

It is important to get an inspection, close at a title company, and record the contract. This way you can homestead your house for tax purposes. Under this process, you have legal rights to the home, but the seller holds the deed until you have satisfied the contract.

If I can be of anymore help to you, please feel free to e-mail me at SMSankey@cbburnet.com.

Suzanna Sankey
Web Reference:  http://www.SuzannaSankey.com
0 votes
Keith Sorem, Agent, Glendale, CA
Wed Oct 7, 2009
1st Timer
In order for a property to transfer title all liens must be removed. The mortgage is a lien.
In order for the title to transfer to you, either the mortgage needs to be paid off or you need to assume it.

Assumability is not common. So you are going to need to obtain financing.
0 votes
Kim Eisen, Agent, Twin Cities, MN
Wed Oct 7, 2009
If you're friend has a mortgage that will probably need to be paid off, or, assumed by you (if the current mortgage company will allow it). You'll have to go thru the qualifying process. If it is not assumable, you do not want to proceed. Period. Until, PLEASE, right now, you call a qualified real estate attorney as I have heard of other ways but not sure if they are valid.

Kim Eisen
Realtor since 1980
0 votes
Peter Boyle, , Minneapolis, MN
Wed Oct 7, 2009
Even though you do not need to take out a mortgage, and are buying from a friend, I highly recommend that you have a title company handle the closing of the home and that you purchase an Owners Policy of Title insurance to guarantee that you will not have title issues in the future. I can recommend a good title company and many cash buyers will handle transactions in this way. But the greatest level of protection you could afford yourself would be to hire a real estate attorney to represent you as well. I would not work strictly with the real estate attorney in lieu of the title company unless the attorney is also a licensed title agent, with the ability to provide an owners policy in his/her own right. Let me know if you would like a referral to either a good title and/or a real estate attorney.

Peter Boyle
0 votes
Connie Erick…, Agent, Maple Grove, MN
Wed Oct 7, 2009
You need more help than you can get from posting your questions here. I would be willing to get you in the right direction. Go to my website to contact me by phone or email.
Web Reference:  http://www.jimandconnie.us
0 votes
Brian Miller, , Minneapolis, MN
Wed Oct 7, 2009
Review:

Your initial questions are valid and essential.

Aaron's information is reliable, most modern mortgages are not assumable (buyer 'assumes'/ takes over seller's mortgage with lender's permission) . That said, odds are your plan is a dead end venture.

1) How do you know you can do the transaction?
2) See #1
3) See #1

I can't stop you from chasing your tail, but I would not invest another calorie without reviewing the mortgage's Due-On-Sale clause.
0 votes
1st Timer, Home Buyer, 55442
Tue Oct 6, 2009
Thanks for your answers. In fact the amount of the mortgage left will be the price I am going to pay. Is it going to be less trouble?
1) How am I going to do the transaction?
2) How to make sure that the money paid will go pay off my friend's mortgage?
3) Does first time home buyer need to get certain amount of mortgage to be qualified as 1st time home buyer?
0 votes
Brian Miller, , Minneapolis, MN
Tue Oct 6, 2009
Everything you're hoping to do hinges on whether the existing mortgage has a Due-on-Sale provision that may require your friend to pay off the principal amount prior to selling.

Explore the Seller's mortgage terms and conditions first, go from there.
0 votes
Aaron Dickin…, Agent, Champlin, MN
Tue Oct 6, 2009
Talk to a real estate attorney, though most loans are not assumable so you are going to have a hard time buying it without a mortgage. From what you suggest, I don't know that you'll be able to collect the $8000 1st time buyer credit. This and other issues is why you need professional help.
Web Reference:  http://www.aaronsold.com
0 votes
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