can you owner finance even when you still owe the house? We would like to have someone take over the payments and give us a down payment . Live in Tx

Asked by Viola, San Marcos, TX Sat Jan 8, 2011

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Tony Z - In…, , San Antonio, TX
Tue Jan 11, 2011
First off, Scott's answer below is flat out wrong. Maybe in NH he's on point, but not here in TX. You can transfer ownership (the Deed) to the new owner, but your bank still has the primary lien on the property.

As an investor, I do this all the time. There are 2 ways you can go about it, you can "rent-to-own", or owner finance with a "wraparound mortgage".

You "rent-to-own" by putting the property under contract for a specific price to close 6-12 months out, with earnest money as their "down payment" that is non refundable and goes directly to you. You attach a lease to the contract as an addendum that has to be fulfilled. Keep renewing the contract/lease until they can get their own financing. Least amount of paperwork, least amount of hassle.

The "wraparound mortgage" is a document that will include your existing mortgage, and "wrap" the buyers mortgage around it (the one you write). Same downpayment that goes to you, and there are more tax reporting and servicing issues you need to consider (who's going to service the note, file interest deductions, etc) so this is more paperwork and more of a hassle, not to mention you need an attorney to draft these for you. Mark Torok or West & West in SA can do these for a fee. Yes, you do have "due on sale" issues, but the risk is non-existent unless you're really trying to defraud the bank or try to screw the bank over.

Let me know if I can assist.

Tony Z
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2 votes
Tony, when doing a rent-to-own, do you have to register it as a rental property where the house is located?
Flag Sat Aug 27, 2016
Hi Tony, I myself am wanting to sell to my current tenant a property he is renting without all the hassle. So would rent-to-own be the way to go with this? I've already pull the amortization schedule for the tenant and if it's agreeable we will proceed. Let me know your thoughts. Thank you. Terry K. email me at
Flag Thu Jan 2, 2014
Greg Fowler, Agent, Dallas, TX
Sat Jan 8, 2011
The answer to your question will depend on the mortgage documents that you signed and the way that you structure the deal. I would advise that you seek the counsel of a real estate attorney to properly structure your intended transaction. Many/most mortgages have a "due on sale" clause in the terms, meaning that if you transfer title to the property to another owner, the lender has the right to call the entire remaining balance due and payable.

An attorney will be able to give you the best advise on how it may be possible to achieve your goals. You will need to provide the loan documentation you signed at closing for the attorney to be of best assistance.

Good luck!
1 vote
Maggie, Home Buyer, Philadelphia, PA
Thu Dec 4, 2014
A house beers sitting for years I contacted the owner she said I can move in and fix it but she owes a second morgage she took out on the house I don't want fix it and than the bank come and take us out
0 votes
Linda Turcato, Home Buyer, San Gabriel, CA
Wed Jul 25, 2012
This doesn't sould right

1.The sale price will be "payoff" plus $15,000. You put down the 15,000. and you pay the monthly payment of 1,450/month to Mr. ???? for one year and then you assume the balance of the loan at that point. That should be a balance of approximately $218,000. I believe Wells Fargo's only "hold back" from what I understand is that you would not be here to live in it within 60 day from the close. This way you told me ??? retires in ???, you guys could go ahead and move in, and then do loan assumption. You do not get your money back - tht would be like asking the bank if you could get your money back - but I promise you the ????? would be willing to carry on an owner finance till you could assume the loan.
I hope this helps. Let me know if you need anything else, or if I need to be clearer.

On Mon, Jul 23, 2012 at 3:53 PM, wrote:

husband has some question

1 who puts the 15K down ( us or the owner )

2 What happens if Wells Fargo won't give us a loan after we have paid for a year (do we get our money back )

3 what happens if we get the loan (but can't get there in 60 days
0 votes
Scott Godzyk, Agent, Manchester, NH
Tue Jan 11, 2011
You can not provide owner financing on house you do not own free and clear. Becuase your have a mortgage, the bank has a security interest in the house, so you can not convey it to anyone else as long as you still have a mortgage on it. You may be better off to lease purchase or rent to own it.

Please see my blog with tips on how to rent to own a home
0 votes
Bob Movin-On, , Hartford, CT
Tue Jan 11, 2011
OK first of all you will not be able to transfer clean title as is expected in a owner finance deal.
If you do find a buyer that does not mind owning a title behind your bank then you need to be careful, because the mortgage stays in your name and guess what happens when that person does not pay.
Real estate investors love these type of deals, in fact this is how I started in real estate investment business.
You as the person being at risk need to realize the Real Estate market has not hit bottom in most areas of the country and foreclosure is still happening at record rates, so the potential of a deal like this going south is high. These deals work great when the market is moving up not down or even flat.

Good Luck
Bob Patrick
Buy a home after foreclosure expert
Movin-On LLC
Helping families/people that have lost their home get back into a new one in as little as 6 months
0 votes
Bruce Lynn, Agent, Coppell, TX
Sat Jan 8, 2011
Very very risky.....make sure you have an attorney involved.
Why drag out your pain for potentially another 30 years.
Short sell is likely the best option or perhaps renting.
Short sell can relieve you of the headache and help you get the most for your property.
Renting can perhaps help, but also might drag out the pain for you.
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0 votes
Nanci Zimmer…, , Cedar Park, TX
Sat Jan 8, 2011
You can do a wrap around -but you would need to have an attorney prepare documents, etc. If you have a due on sale clause - and the lender finds out-- then they can request the note to be payable immediately. However, these days the lenders don't want any more property- they have enough with all the foreclosures- but there is still a risk!!! (Again, talk to an attorney).

If you decided to go this route-- you would want the buyer to send payments to you (with taxes and insurance, etc.). If there is an HOA fee you should have the buyer pay that to you as well. This way you can make the payments to your lender /hoa to ensure they are getting paid.
0 votes
David Velasq…, Agent, amarillo, TX
Sat Jan 8, 2011
Call me 806-881-4321. I will take over payments. This isdavid
0 votes
I'm in the same situation in Borger. I have a lady requesting to buy my private sell home for the asking price of 47k with 20k down as an owner finance. The principle balance on the mortgage is 27k. I could sure use the 20k, but would prefer she get financing, because of the risk involved. By the way david this would be a great income investment if you are interested or know someone that is call me 806 274 8913. Id be willing to come off my asking price a good bit for a quick sale.
Flag Tue Jul 2, 2013
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