Assuming a Home and Mortgages...

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tealeaf_IHB

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We're very close to striking a deal on a property. The home needs some TLC inside, but is in an excellent area with great schools with a great floor plan. Financially, the home would break even as a rental and we intend to stay there for at least 10 years.



The homeowner passed away and had no next of kin. The seller on the home is the trustee of the estate and has been trying in vain to sell the home. There are 2 mortgages, both adjustable, both current - though the seller is prepared to let the home go back to the bank after nearly a year on the market with price declines that are approaching short-sale territory.



We spoke with the seller and offered to take over the mortgages - 2 reasons for this, 1) we don't have cash for a down (but have excellent credit and income); 2) the balance on the mortgages are below recent comps for the neighborhood. We intend to have a full inspection and appraisal on the home before signing on the dotted lines.



We spoke to a reputable appraiser and an honest mortgage broker and verified comps to arrive at value (less the TLC factor) and confirmed we can refi to a single fixed rate loan (provided there is no cash-out).



We are completely inexperienced in this area -- and so are most real estate agents. The seller's agent has never done this before, and navigating through a sea of agents is treacherous at best.



The seller confirmed the first is assumable, but requires a fee. We have not yet contacted the bank on the second. Both notes are with major banks.



I am seeking advice on the following:



- Is it best to let the home hit NOD status before doing this type of transaction? We want to eliminate the transfer fee as it will likely add to the balance on the loan or be an out-of-pocket expense, and the bank was less enthusiastic about an assumption when they saw the note wasn't in default (crazy...).

- Would you work with an RE broker or attorney to do this type of transaction?

- Would the trustee simply deed us the home and mortgages or record a sale or both? What would the property tax basis on the home be?

- Would you approach the first TD or HELOC bank to refi upon/subsequent to assumption?



Thanks for any additional advice or pitfalls in this area...
 
[quote author="awgee" date=1220180189]I would wait until it goes back to the bank so I would not have to pay on the second.</blockquote>


I've thought about this -- the good REOs are getting bid up, perhaps to a level above the second. More relevant is that we can't scrape enough of a down together to have a strong offer - that's a non-starter with bank owned properties as they compare 4-5 offers before making their choice. Plus is drawn out... in the end, the price will be close to what we'd get this place for...
 
It is very late, and my response will not be the kind of response you deserve for such a bunch of great questions. I will try to answer some of them later. Awgee has a point, but his point could be made to beat the bank into submission if you have the guts to do it.
 
Tealeaf - in my opinion, you have absolutely no business buying a house. Home ownership should only come after you have shown years of financial discipline, saving up enough cash for a down payment. That's how I did it, and that's how most people used to do it. So get over your sense of entitlement that you deserve a house now (or that you have a young family and the kids NEED a house - horsehockey!), and find a rental that you can live in while you work on building up a down payment.
 
[quote author="irvinesinglemom" date=1220223305]Tealeaf - in my opinion, you have absolutely no business buying a house. Home ownership should only come after you have shown years of financial discipline, saving up enough cash for a down payment. That's how I did it, and that's how most people used to do it. So get over your sense of entitlement that you deserve a house now (or that you have a young family and the kids NEED a house - horsehockey!), and find a rental that you can live in while you work on building up a down payment.</blockquote>


+1



many of us who already have our downpayment are waiting... there is a reason for this. Do tons of research in the meantime, it really makes it easier to wait when you have a good understanding of why home prices will continue to fall.
 
[quote author="tealeaf" date=1220177480]The homeowner passed away and had no next of kin. </blockquote>


So I gotta ask... did the owner pass away <em>in </em>the house? Correct me if I'm wrong but that would definitely not be good feng shui. I know some people have a problem with a death inside a home (I believe that's why it has to be put on the disclosure statement if it was within the last 2 years or so and can only be excluded if it's a death from HIV / AIDS.) Just wondering -- maybe it has something to do with them having trouble selling...?
 
[quote author="Ambiepants" date=1220245575][quote author="tealeaf" date=1220177480]The homeowner passed away and had no next of kin. </blockquote>


So I gotta ask... did the owner pass away <em>in </em>the house? Correct me if I'm wrong but that would definitely not be good feng shui. I know some people have a problem with a death inside a home (I believe that's why it has to be put on the disclosure statement if it was within the last 2 years or so and can only be excluded if it's a death from HIV / AIDS.) Just wondering -- maybe it has something to do with them having trouble selling...?</blockquote>
I never thought about feng shui until recently.

My grandfather was living with my parents and he passed away in their home.

My parents sold the house shortly thereafter to a nice couple in their 50's (both healthy).

The next year one of the new owners passed away in the same house.



Eerie.
 
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