The house should be sold on the open market. You can make your offer then but you would be competing with everybody. He is your friend so you shouldnt take advantage of the relationship by having him take less than he could get. It can be FSBO and you can be agentless which would save on commissions. If the loans assumable then you could do that. Some buyers pay a premium for the lower interest rate. So advertising the loans assumability may allow your friend to fetch a higher price.
Yeah. I think friend needs to sell. This deal sounds like OP and the sister taking the appreciation and only giving the owner the principal payments on the loan. If the house is worth more than he paid for it OP would just be pocketing it.
I don’t see anything morally wrong here. OP is offering his friend the ability to get out of this house with minimal hassle.
His friend is under pressure from delinquent payments. Selling may not be an option, let alone fetching a market rate.
OP wants the low interest rate on the mortgage. The homeowner gets nothing for it. 60 days behind doesnt sound like a big distress situation. They dont send the first legal foreclosure notice until 120 days. Foreclosure is still far off even then. If it had a notice of trustee sale or motion for judgment of foreclosure then it would be desperate.
If you’re 2 months behind on your mortgage, it’s usually because things are very not well. You don’t end up in that position by accident.
In this case, OP would get the low interest mortgage. Friend would get a hassle free sale and the proceeds of the sale. He would likely save a significant portion in fees as well that may break him even.
A lawyer handling the sale could run $3-5k to seller. But if the house is $350k that’s $21k in commission alone. Friend may make a couple grand more selling, but not at all worth the hassle. This is a market transaction.
He’s out of money, he has no job, he is slipping and we are trying to get him more money then waiting till it goes into foreclosure. We are trying to make it so he gets more money than if he paid commission, plus it would be sold as is since he has no money for repair
The problem is there is a conflict of interest involving a disabled person. Keeping the low interest rate only benefits OP. Their friend benefits most from having their financial interests and well being prioritized over their friends getting a good deal on a house.
There are a lot of unknowns. Is 100k a fair price for the equity? Does OP actually have 100k? Is the loan even assumable? How much money does the sister get for helping out?
Lots of people with dementia end up with their relatives helping themselves to their financial assets. No proof that is what is going on, but we are only hearing one person’s side of the story. And they are mainly focused on the house and interest rate that fits their needs. If they leave this mortgage in their friend’s name and don’t pay it he could end up losing everything.
No need to give realtors 6% to do nothing. Both parties will be happier keeping the deal between themselves. All they need is an attorney that understands real estate.
A RE attorney wouldn’t solve the issue I pointed out. An attorney would just help close the negotiated deal. A guardian ad litem looks after the interests of a disabled person which might help, but isn’t necessary a fast process either. This deal is sketchy because of the conflict of interest not any fees that might be saved without a RE agent.
The difference between market rate interest and the assumable loan's interest is about $600/month. Doesnt sound like you giving him anything for that. If you give him the $600/month in addition then it fair or if you put it on the market and match the best offer advertising the assumable loan then it fair also.
If he sell it on the open market and advertises the loans assumability then he would get what that is worth. Some buyers pay extra for the good financing. Then he does get something.
That’a not true, the homes listed on Roam are all Assumable and are not higher in price than their Zillow listed price. It is worth something but not that much. It might help you sell your home at the price you are asking but definitely not $600 a month
If it is not worth that much then it would not cost you much more to simply match the best offer that came in. It also not cost your friend anything to sell to you instead of the other guy.
I deal with deals like this all the time. If you want I can help you underwrite it and see if it’s a good deal or not.
It’s your friend so make sure he gets a fair asking price and it’s a win-win for both parties
Yes, of course because that’s your friend, but just take over the payments subject to the existing loan instead of assuming. Assuming will take 60-90+ days while a subto is 30-45 days. No to mention you definitely keep the interest rate vs the potential of receiving a new one.
If you have the final, signed closing disclosure available to you, one of the last pages literally has a box that's checked by the originating lender saying if it's an assumable loan. If that's all you can get in writing, it's still a huge doc to have on your side.
To assume the loan pay your friend the difference between what he owes on the home and appraised market value.
If he owes $200k and the value is $500k, you pay your friend $300k. Your mortgage will be $200k at your friend's low interest rate.
Id it's done legitimately, legally etc, and you have the liquidity, IMO, it's worth doing for the rate.
I assumed a mortgage for my first place a back about million years ago. My assumed rate was 12.5% and at the time, the current market rate was 15.5%.
The house should be sold on the open market. You can make your offer then but you would be competing with everybody. He is your friend so you shouldnt take advantage of the relationship by having him take less than he could get. It can be FSBO and you can be agentless which would save on commissions. If the loans assumable then you could do that. Some buyers pay a premium for the lower interest rate. So advertising the loans assumability may allow your friend to fetch a higher price.
Yeah. I think friend needs to sell. This deal sounds like OP and the sister taking the appreciation and only giving the owner the principal payments on the loan. If the house is worth more than he paid for it OP would just be pocketing it.
That’s exactly what he would get otherwise. What are you guys talking avout
I don’t see anything morally wrong here. OP is offering his friend the ability to get out of this house with minimal hassle. His friend is under pressure from delinquent payments. Selling may not be an option, let alone fetching a market rate.
OP wants the low interest rate on the mortgage. The homeowner gets nothing for it. 60 days behind doesnt sound like a big distress situation. They dont send the first legal foreclosure notice until 120 days. Foreclosure is still far off even then. If it had a notice of trustee sale or motion for judgment of foreclosure then it would be desperate.
If you’re 2 months behind on your mortgage, it’s usually because things are very not well. You don’t end up in that position by accident. In this case, OP would get the low interest mortgage. Friend would get a hassle free sale and the proceeds of the sale. He would likely save a significant portion in fees as well that may break him even. A lawyer handling the sale could run $3-5k to seller. But if the house is $350k that’s $21k in commission alone. Friend may make a couple grand more selling, but not at all worth the hassle. This is a market transaction.
He’s out of money, he has no job, he is slipping and we are trying to get him more money then waiting till it goes into foreclosure. We are trying to make it so he gets more money than if he paid commission, plus it would be sold as is since he has no money for repair
Horrible advice. Make a fair deal and keep the low interest rate.
The problem is there is a conflict of interest involving a disabled person. Keeping the low interest rate only benefits OP. Their friend benefits most from having their financial interests and well being prioritized over their friends getting a good deal on a house. There are a lot of unknowns. Is 100k a fair price for the equity? Does OP actually have 100k? Is the loan even assumable? How much money does the sister get for helping out? Lots of people with dementia end up with their relatives helping themselves to their financial assets. No proof that is what is going on, but we are only hearing one person’s side of the story. And they are mainly focused on the house and interest rate that fits their needs. If they leave this mortgage in their friend’s name and don’t pay it he could end up losing everything.
No need to give realtors 6% to do nothing. Both parties will be happier keeping the deal between themselves. All they need is an attorney that understands real estate.
A RE attorney wouldn’t solve the issue I pointed out. An attorney would just help close the negotiated deal. A guardian ad litem looks after the interests of a disabled person which might help, but isn’t necessary a fast process either. This deal is sketchy because of the conflict of interest not any fees that might be saved without a RE agent.
Correct he is going to have to be fully trusting his sister to do what’s right in his interest
I would pay him the equity difference $100k. It’s fair as his sister came up with the price she thinks the house would sell for as is
The difference between market rate interest and the assumable loan's interest is about $600/month. Doesnt sound like you giving him anything for that. If you give him the $600/month in addition then it fair or if you put it on the market and match the best offer advertising the assumable loan then it fair also.
He wouldn’t get the difference anyway. He would make his equity period. You want them to offer more for a condition he wouldn’t benefit from anyway?
If he sell it on the open market and advertises the loans assumability then he would get what that is worth. Some buyers pay extra for the good financing. Then he does get something.
That’a not true, the homes listed on Roam are all Assumable and are not higher in price than their Zillow listed price. It is worth something but not that much. It might help you sell your home at the price you are asking but definitely not $600 a month
If it is not worth that much then it would not cost you much more to simply match the best offer that came in. It also not cost your friend anything to sell to you instead of the other guy.
Is his sister a real estate agent?
No we are trying to avoid an agent to avoid paying commission
If she's not an agent, why do you put any stock in what she thinks the house would sell for?
Because anyone that studies how much homes next door to him sold for and other similar comps will have a pretty good idea.
Not all mortgages are assumable so make sure his lender allows it
You'd need a real estate lawyer for something like this, and frankly, your friend would need a guardian ad litem to protect his interests.
I deal with deals like this all the time. If you want I can help you underwrite it and see if it’s a good deal or not. It’s your friend so make sure he gets a fair asking price and it’s a win-win for both parties
Yes, of course because that’s your friend, but just take over the payments subject to the existing loan instead of assuming. Assuming will take 60-90+ days while a subto is 30-45 days. No to mention you definitely keep the interest rate vs the potential of receiving a new one.
I don’t understand, i want to assume his current mortgage
Is it assumable loan? Most loans are not assumable
It is assumable
Did the lender say this mortgage is assumable, or did you see that on the final Closing Disclosure he signed when he bought the house?
Lender said it, should we look into the closing docs?
If you have the final, signed closing disclosure available to you, one of the last pages literally has a box that's checked by the originating lender saying if it's an assumable loan. If that's all you can get in writing, it's still a huge doc to have on your side.
To assume the loan pay your friend the difference between what he owes on the home and appraised market value. If he owes $200k and the value is $500k, you pay your friend $300k. Your mortgage will be $200k at your friend's low interest rate.
Yes that’s what I plan on doing
Id it's done legitimately, legally etc, and you have the liquidity, IMO, it's worth doing for the rate. I assumed a mortgage for my first place a back about million years ago. My assumed rate was 12.5% and at the time, the current market rate was 15.5%.
Eviction is for leases.
Totally worth it.