My fiance and I found a house to buy, but the only way we can do it is with the owner carrying the contract or a lease option to buy. The owner has said that they would carry the contract with only the first month's payment as a down payment (pretty much unheard of). They understand about being in the situation that we are in and only having that much money as that is the situation that they were in when they first bought this house (they now own 3-4 homes). We are going to go look at it in two days. We have seen the outside of it and love it. I am wondering if anyone knows what we should be looking out for in the contract, what questions we should have answered/be asking, etc? Also, what is involved with something like this (legally)? How does this work? This is all new to us.
2006-08-18 14:04:25 · 4 answers · asked by honey 6 in Business & Finance ➔ Renting & Real Estate
Be really careful. I can understand wanting the house without putting much money down, but this can be risky. Pay close attention to what will happen if you default - this should be written out in detail in the contract. Also make sure the payments will stay the same amount through the term of the loan. People have gotten burned by owners raising the payment amount above what they can afford, then foreclosing as soon as they miss a payment. Make sure you know exactly how much you are paying.
Also look at the title. Make sure it is clean with no liens on it. If they had a title search done on it when they bought, get a copy of it. Get a copy of the survey too, and have professional inspect the home ($3-500). The survey will describe the boundaries of the property. The home inspector can find problems with termites or the foundation.
You will want the title transferred to your name, with the prior owner listed as the mortgage holder. Find out who pays for taxes and homeowners insurance. This is a big chunk of money every month. Regular mortgage companies collect extra from you each month to pay these expenses on your behalf.
2006-08-18 14:11:53 · answer #1 · answered by Catspaw 6 · 1⤊ 0⤋
An owner carrying back a mortgage is conducted the same as if a regular mortgage company does the financing. You agree on an interest rate, the number of years you have to pay the loan off , thus the monthly payments. Now you draw up a contract with that information, go to a title company or escrow (Closing office) to transfer the property to your name.
You will be required to pay some closing cost like escrow fee, and title fee.
If you so desire you may have a house inspector take a look at the house before you sign the contract or make that a part of the contract. You might also want to have a appraiser appraise the property to see if the value is there.
Owner financing is an excellent way of financing a home. Normally there is little or not qualifying.
You pay the mortgage the same as any other. ON TIME. If you fail to make the payments on time, your state law has already laid out the proper way for the lender that includes owners that carry back a mortgage to foreclose on the property. They can't just walk up one day after you are late and say sorry you have to move. There are laws in each state to protect you.
This is a normal transaction covered by a contract that you sign along with the seller.
I hope this is of some use to you, good luck.
"FIGHT ON"
2006-08-18 21:59:50 · answer #2 · answered by Skip 6 · 1⤊ 0⤋
Have an attorney that specializes in Real Estate guide you. It is money well spent.
2006-08-18 21:15:00 · answer #3 · answered by andywho2006 5 · 0⤊ 0⤋
http://www.breakingbubble.com/index.htm
2006-08-18 21:32:40 · answer #4 · answered by Anonymous · 0⤊ 0⤋