Can I sell my house with a mortgage still on it?
Hello, here is the deal, I owe money on my mortgage, but I want to move to another city. I have a guy who loves the house, but he wants to do the owner financing. I figured I could sell it to him for a higher price than what I owe on it and charge him a yearly interest. I have explained to him that there is a lien on the house and he is fine with it. Basically I see this as better than foreclosing if I can no longer live there and this way he gets to keep it if he finishes paying me the full term of the loan which will probably be 15 years.
By the time he is done paying me I would have full ownership of the house and the title. Then I could transfer it to his name after he finished paying me. I am asking him for a down payment and his monthly payment will include the taxes, and any insurance I pay that way I am covered. So what can I say in the contract that I create, or do I need to get some legal paperwork? Help:)
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Check with your mortgage holder, or read through your mortgage papers. Some mortgages won’t allow this even if you continue to make the payments. And in any case, you can’t transfer title to him until it’s free from the other mortgage.
Be very careful here. If you do manage to arrange this, and he trashes the house, you are still responsible.
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LikeDislikeYes it can be done, but you **ABSOLUTELY** need a lawyer and a good one, too. Make sure this guys credit is decent. You could get stuck with him living in your house that is in your name and he could default on payment which would screw you royally especially if your facing possible foreclosure. Best of luck to you!
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LikeDislikeWell are you goiing to be in the loan? because if he stops paying the loan, that will go to your credit and your’r responsible
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LikeDislikeI am not an expert in this area but I would think you should be able to draw up a sort of rent to own agreement. I mean this seems to be more in your favor so if you are not attempting to transfer the property now then you should be in a good position.
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LikeDislikeUh…you are talking about a buy to own option.
Not a game for an amatuer; get a real estate atty involved to write a contract. Need language to protect you if he defaults; to protect him if you die; if you get all his payment and refuse to transfer after the agreement is completed, to keep you from placing additional liens against the property, to protect him if you default and the property is foreclosed anyway.
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LikeDislikeBasically, you are willing to allow him to use your mortgage loan, live in your house, and pay you only rent essentially?
That’s pretty risky. He’s leasing to own, but there’s no guarantee that he will still want to own your home in 2 or 3 years. You’re talking about 15 years. And if you are moving out of state, it would be difficult to stay on top of it.
Have you even run a credit check on him? I know you’re eager to sell or get out, but really think about it. If that’s your only way, I’d get a Realtor and let them manage the property for you. That would increase your asking monthly price to pay them their commission, but you have to have someone in the area looking out for your home.
This sounds like a bad deal to me. Be careful.
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LikeDislikePull outyour Deed of Trust and read it carefully. Most of them contain a “Due on Sale” clause which means you cannot sell it like this and if you do the lender can declare you in default and foreclose on the home.
Have you considered that the reason he may want you to do owner financing is that he cannot qualify for a loan because he has bad credit. 100% financing is still available for those with good credit (Fannie Mae Flex 100) so if he wants it make him buy it from you or you could be asking for for more trouble than you want to deal with.
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LikeDislikeDo not allow your circumstances to cloud your good judgment. Contact a real estate attorney for advice. Also, contact your lender to see if this is even a possibility. I would hate to see you allow this person to move in and then destroy your property. Invest the time and money now to protect yourself and your home.
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LikeDislikeA good place to find answers like this is http://lbalending.com/
At least they have helped me with similar questions. I hope this helps
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