I have a client that has property she just wants to get rid of. Of course the market isn't good...so I'm considering purchasing, assuming or just out right transfer and assume. What are some questions I need to ask my client and what are some important points to mention or bring up during discussions and negotiations?
2007-03-06 13:44:37 · 6 answers · asked by Jatom J 1 in Business & Finance ➔ Renting & Real Estate
most loans today are not assumable. She can Quit Claim Deed the property to you for just the cost of a filing fee at your county recorders office but you would then have to show proof of ownership (the deed) and get a new loan.
2007-03-06 13:50:01 · answer #1 · answered by Anonymous · 0⤊ 0⤋
1. Focus on the concerns Scott and Skip had raised concerning conflicts of interest. Even if you think you are helping a client it might not be so clear if there was a lawsuit filed. Sometimes it is better to let the client take the fall than to get in the middle.
2. If we are talking about the US you can assume the loan is not going to be assumable unless the lender approves. That will mean they qualify you in the same fashion as if you were taking out a new loan.
3. Some people take over a property subject to the existing financing. There are many legal ways to do so. As there is a contract between the seller and the lender that they will not transfer title the lender has the right to call the loan due. The original borrower is still on the loan. You can be free of all legal claims from the lender but you likely will still have obligations to the seller.
4. In many cases taking over the loan is a good deal for the seller even if they still appear on the title. Compared to a foreclosure they could be way better. That does not make it easy to structure or the right thing for you to do if this is your client. A third party who has not legal requirement to represent the client could be a better solution.
2007-03-07 05:55:40 · answer #2 · answered by Anonymous · 0⤊ 1⤋
I don't know what your relationship is with your client, but with that verbage there's a distinct possibility of a conflict of interests. Make sure that all of your i's are dotted. The matter of assuming a loan used to be pretty commonplace. Along came the 70's and 80's and all of that changed. Most lenders have inserted language that makes an assumption up to them so that they can refresh their assets at the current rate in the case of a sale. You can still occasionally find those loans, though. Sometimes, if a loan has an attractive rate, it can raise the value of the asset being sold. You should determine the fair value of the property which is probably about half-way between the tax assessment and a bonafide appraisal. From there, consider the ramifications of the mortgage. If you had to get your own financing what would the payments be vs. what the payments would be with the pre-existing mortgage.
2007-03-06 13:56:17 · answer #3 · answered by Scott K 7 · 0⤊ 1⤋
I don't know what relationship you have with this client, but are you in a position of trust and not using your position to take advantage?
That being said, 99%of the loans written today have a non-assumption clause,so the loan is basically not assumable.
The best way to do this transaction is write some type of contract stating that you will take the property subject to the existing loan. Any additional funds should be included in this agreement if there are gonna be any. Put a date on this agreement. Make sure both of you sign this agreement.
Call a title company, that you will find in your local telephone book. Tell them you are purchasing a property subject to the existing loan. Also that you want them to act as the escrow closing agent. Some states require attorneys to act as escrow closing agents to if you are in one of them you might ask the title company to refer you one.
The title or escrow closing company will direct you through the rest of the procedure to closing.
Under this procedure you will get a title report indicating the title to the property has changed from your client to you.
Make sure you mail the monthly payments on time each time and they are made from your personal checking account. This is important because once you have made this mortgage payment this way for one year, you will have cancelled checks from your personal checking account indicating you have made the monthly mortgage payment. With this proof you will be able to refinance this property as oppose to a purchase. Over 99% of the lenders will accept this as a refinance.
I hope this has been of some use to you, good luck.
"FIGHT ON"
2007-03-06 14:14:24 · answer #4 · answered by Skip 6 · 0⤊ 1⤋
Why on earth would you want to assume a loan on a house in a market like this? I am assuming when you say that "the market is not good", you are in one of the many markets where most homes are mortgaged at way more than they are worth to sub-prime lenders who can't afford the payments. Prices are going down and will continue to do so, and you would be paying much more than you should, pretty much taking a huge financial loss for your client.
2007-03-06 13:52:47 · answer #5 · answered by jayne_galaxy 3 · 0⤊ 1⤋
wel it has to be an assumable loan to start with. Is it fixed or variable (fixed is set variable changes as interest rates do) Do youhave to pay any points (up front fees to assume note) and last I guess are taxes upto date and notes upto date.
2007-03-06 13:53:11 · answer #6 · answered by Dennis G 5 · 0⤊ 0⤋