Need cash ! - Posted by Kim

Posted by Big Harold on November 30, 2000 at 15:34:11:

This sounds pretty simple, but there are a few ways you could do this. You could have your step-mom give you the info to where the payments are being sent, then you send the payments directly in to the mortgage company. I’ve been told that if you do this for a year and keep copies of the cancelled checks, you could then have a lawyer contact them and ask them to allow you to assume the loan, since they’ve been accepting your payments on time for this long. Just have to be sure to always pay on time. There is no guarantee that this will work, but it’s definitely worth a try.

You could also set up a land trust, and transfer the title that way, so you’re actually owning it by being the beneficiary, but you don’t have to assume the loan. A bit more complicated, but still should work.

Lastly, and definitely not the least, you could go to a mortgage broker and get a mortgage on this, if your step-mom will gift it to you. I can’t imagine you not getting a loan to cover the mortgage left, if indeed the property is worth that much more. Get a good appraisal of it - the money spent is worth it - and then go to a good broker. They definitely should be able to get you fixed up.

I hope I’ve been able to help you, as so many people here have helped me. Good Luck!

Big Harold

Need cash ! - Posted by Kim

Posted by Kim on November 30, 2000 at 13:42:05:

Can anyone help me ? I’m in trouble, need cash.

I’ve been renting my Fathers Phoenix home for 5 years, he passed Nov 99 from cancer. Title to the Phoenix home passed to my Step mom in OK. I pay the rent/mortgage without premium to her, $ 560 month. She then pays GE Capitol mortgage co.

Step mom and I are both broke. Dads passing without insurance, will, trusts, etc. took a toll on us both. We talked about somehow tapping the equity in the Phoenix home and sharing it. But…

My credit is 0, I had a BK 1989 that just came off reports. The only entry on my credit report is paid off car, 1990 sentra, that I still drive. I can’t speak for my Step mom’s credit. I care for and rent rooms to my Mother and Brother here in Phoenix. I also do computer work on the side. $ 1500 a month prox total income for me. Again can’t speak for Step mom, She does not work, living with family now in OK.

Step mom and I agree the home should belong to me, she offered to gift it to me, someone advised Warranty Deed. I don’t see that as a solution to money problems do you ? I would love the house and don’t plan to move but can’t qualify for any loans or even assume this loan.

Details about current loan
Original principal balance: $ 64,252.
Current principal balance: $ 58,900.
Loan type is FHA, 30 year, 8% interest rate.
Monthly payment $ 558.95.
Matures 12/1/2023. Home value unknown, a realtor says homes in area are selling for $ 115,000 with no pool, mine has a pool. What else ? Home is in zip 85032.

We are both in need and very open to any ideas, thanks in advance.

Re: Need cash ! - Posted by Brent_IL

Posted by Brent_IL on December 01, 2000 at 12:51:55:

Kenn’s point #6 is most important

I?ve found that it?s very easy for a lump sum of money to evaporate quickly when I?m broke. When it?s gone, it?s gone forever. Sadly, the problems causing the lack of money haven?t gone anywhere.

Your recent gain in assets is a one time only occurrence. If funds are short now, how would you make the additional payment on a 2nd mortgage? If you lose this property for a reason you might not be able to foresee now, how will you get the $115,000 to replace it?

#4 is your solution. Read everything on this site about tenants and landlording. Then, carefully choose your renters. IMHO, It would be nice to be able to say, ?I choose to rent now, because the tax-free income I?m receiving for my real estate investments is making the payments?

Hold on everyone, nothing creative here!! - Posted by KennS

Posted by KennS on December 01, 2000 at 11:30:04:

First of all, this house is NOT the answer to your money problems.

Second, you need to understand that you can take over your father loan and not have to qualify. All you need to do is make the payments.
The Garn Act specifically says that a lender may not exercise it’s option pursuant to a due-on-sale clause upon a transfer where the spouse or children of the borrower become an owner of the property!

Some thoughts and ideas:

  1. Find out the TRUE aactual value of your property. Only look at properties that have sold in the last six months in your area. Make sure to only use comps from homes just like this one! In Arizona, you might be able to add up to 5k for the pool (if the comps don’t have one).
  2. Have your step-mom gift you the property. (She will be able to avoid paying a gift tax - see a tax accountant for details)
  3. You are now the owner of the property and you can continue making your payments and move on with your life.
  4. In Phoenix, you can probably rent a house out for approx. 1% monthly of the house value. If the house is worth 100k, it should rent for approx. 1k per month. 120k house could go for 1200 per month, etc. You can rent it out and move into an apartment for half that amount.
  5. You can sell the property and do what ever you want with the proceeds. Please note, you will be taking over your father’s cost-basis on the property. See a tax accountant to find out if and how you qualify for an exemption from the capitol gains when you sell the house.
  6. It sounds as though this house is the only investment you have. I would strongly advise you to hold onto it and not cash it out. If you do cash it out (bad idea), please please please use that money only for investment purposes. Do NOT spend (waste) the only item of value that is left.

There is nothing “creative” to be done here!
Again, this house is NOT the answer to your money problems.
Good luck with everything.

  • Kenn

I am worried for you!

Re: Need cash ! - Posted by Bob

Posted by Bob on November 30, 2000 at 16:58:55:

I believe that I remember something in the CS course that said if you apply for a first mortgage on a home that and the amount of the mortgage is less than 50% of the appraisal then there is no qualifying for the loan, does anyone know if this is correct? If so that takes care of moving the loan to your name.