House purchase dilemma....help!

[chalmers]

http://www.mtgprofessor.com/a%20- options/are_assumptions_a_good_deal.htm

Pretty good information on this Assumption Loan. I guess I need to find out the current interest % he has on the home.

 

[boomhower]

Thanks for the great insight everyone, I appreciate it. You guys sure do know your stuff.
I have some updates to some of the information I posted.

The mortgage transfer is called an Assumption Loan through Wells Fargo. It apparently allows you to do just that...please correct me if I'm wrong.

The reason the guy (Dave) would prefer this way is because apparently nowadays banks are requiring sellers to pay both closing costs for the buyer and seller of a house? So the $16k I mentioned previously was what he'd have to conjure up if he sells the house to close it...with an Assumption Loan...no such closing costs exist. That's why he'd be fine with paying off my apartment payoff...he'd still be ahead (if you look at it that way).

I'll learn more when I talk to Dave tomorrow about his loan and what's it looking like right now.

He's full of crap. Banks do not force sellers to pay the buyers closing costs. That is something that is often negotiated, usually in exchange for a higher selling price. That just shoots up more red flags. It certainly looks like he is trying to unload a shitty mortgage on you. You need to find out how much is left, the interest rate, and what the house is actually worth. I'm betting you could just buy the house with today's low interest rates and at todays market value at a cheaper price that what he is trying to get you to take over the loan for.

 

[chalmers]

He's full of crap. Banks do not force sellers to pay the buyers closing costs. That is something that is often negotiated, usually in exchange for a higher selling price. That just shoots up more red flags. It certainly looks like he is trying to unload a shitty mortgage on you. You need to find out how much is left, the interest rate, and what the house is actually worth. I'm betting you could just buy the house with today's low interest rates and at todays market value at a cheaper price that what he is trying to get you to take over the loan for.

Thanks for that, you're probably right. What about the fact that I'll have trouble coming up with the seemingly necessary 15%+ down payment for a house anytime in the next few years? I was more looking at it as a way to get into a house with the same payment I do now and not have to pay a down payment, but I see what you mean.

 

[GotIssues]

6 years ago was the PEAK in nationwide house prices. This particular location may not have been at its peak. But, generally, on average, housing prices have fallen ever since.

Put it this way, if it was the median house selling at $229,200 and 5% interest rate, then it would now have a balance of $206,132 assuming all payments made on time but without any extra principal. The median house now sells for $168,300. Meaning, if the OP's location behaved like the naitionwide average, and it was a median house, then the OP would be losing $37,832 with this deal.

This location may not follow the national trends though.

Thanks? I don't know why you are trying to convince me of something I've stated specifically and you quoted. 6 years ago puts the timeframe before (pre) housing bubble bust, no convincing needed because I already know.

 

[The_Dude8]

He's full of crap. Banks do not force sellers to pay the buyers closing costs. That is something that is often negotiated, usually in exchange for a higher selling price. That just shoots up more red flags. It certainly looks like he is trying to unload a shitty mortgage on you. You need to find out how much is left, the interest rate, and what the house is actually worth. I'm betting you could just buy the house with today's low interest rates and at todays market value at a cheaper price that what he is trying to get you to take over the loan for.

i thought buyers are responsible for closing cost on their part. right?

 

[dullard]

Thanks? I don't know why you are trying to convince me of something I've stated specifically and you quoted. 6 years ago puts the timeframe before (pre) housing bubble bust, no convincing needed because I already know.

I'm just emphasising what you said. Not only is it pre bubble burst, but it is right when the bubble was at its maximum. For example, 10 years ago was pre-bubble burst too, but the price then wasn't much different than now. I'm just adding to what you said.

Too many people quote only when they disagree. I meant to quote to show agreement. But I clearly failed on that aspect.

 

[GotIssues]

I'm just emphasising what you said. Not only is it pre bubble burst, but it is right when the bubble was at its maximum. For example, 10 years ago was pre-bubble burst too, but the price then wasn't much different than now. I'm just adding to what you said.

Too many people quote only when they disagree. I meant to quote to show agreement. But I clearly failed on that aspect.

Hehe, no problem. I either figured you quoted the wrong one or had reading comprehension issues, neither of which is uncommon in the world of internet message boards. When I first started reading, I thought you were agreeing, then you went on with reasons in a manner to which sounded like you were trying to convince me, that's what threw me for a loop.



If he gets proper inspections, appraisals, and potentially home warranty, it might be something to seriously consider. One wouldn't necessarily wouldn't need any downpayment, depending on what the appraisal value vs amount of mortgage is. I would think the biggest roadblock (assuming the deal isn't a sham) would be current bills (2 cars and student loans) vs current income (if you the only one on the loan).

Just remember that owning a house is more expensive than renting and figure that in. When renting, if something breaks, you call the landlord. When you own, if something breaks, you pay to get it fixed/replaced.

 

[BurnItDwn]

I think I need help. For some reason, I saw "horse puncture dilemma", I hate mondays!

 

[Onita]

Thanks for that, you're probably right. What about the fact that I'll have trouble coming up with the seemingly necessary 15%+ down payment for a house anytime in the next few years? I was more looking at it as a way to get into a house with the same payment I do now and not have to pay a down payment, but I see what you mean.

A) You don't need 15%.
B) If you can't afford the down payment, you can't afford the house.

 

[blackangst1]

BTW have you checked to see if it has a clean title? You should be able to do it online at the county.

 

[preCRT]

Hire an inspector to check out the house for damage, radon, snakes, mold, etc.

Hire a lawyer to check the title and all other documents.

 

[Kwatt]

I just want to say be careful. But it does happen..
When I bought my house I got a similar deal. Take over an assumable loan with nothing but the 1st payment down. I also paid a lawyer to check the title. The house was only 3 years old and had 2 years left on a 5 year transferable builders warranty. What I missed was the 12.5% interest rate. With no credit history I could not refinance for 5 years. When I did refinance I got 5.375 % for 15 years and the mortgage payment dropped 15 %. It all worked out in the end. But the first 5 years was brutal!



.

 

[chalmers]

I just want to say be careful. But it does happen..
When I bought my house I got a similar deal. Take over an assumable loan with nothing but the 1st payment down. I also paid a lawyer to check the title. The house was only 3 years old and had 2 years left on a 5 year transferable builders warranty. What I missed was the 12.5% interest rate. With no credit history I could not refinance for 5 years. When I did refinance I got 5.375 % for 15 years and the mortgage payment dropped 15 %. It all worked out in the end. But the first 5 years was brutal!



.

Thanks for that...yeah I agree that the interest rate he currently has is one of the most important parts.

 

[spidey07]

Thanks for that...yeah I agree that the interest rate he currently has is one of the most important parts.

What's most important here is the terms of the loan and the amount. It's next to impossible for the loan to NOT be more than the value of the house (underwater). As mentioned he purchased damn near the PEAK of housing prices and if 10-16k is a big deal to him likely didn't put much down on the house (and if he did, he'd want that money back and outright sell it to you).

This has BAD idea written all over it. Proceed with extreme caution and do your homework more than we can provide. It smells highly suspect and if it's too good to be true then it probably is sounding alarm bells all over the place. Why he doesn't want to just sell outright says to me "I want some sucker to take over my underwater mortgage that I can't get out of". A mortgage isn't a rent payment, there's real money at stake here. I just forsee you paying his mortgage for him, but he still has the house making you just a renter and building his wealth.

I can see you're emotionally attached to this deal, stop that right now, serious money and property is at stake.