So my roommates and i are currently renting in a 3bd apt that is pretty nice and spacious and the rent for the area is pretty reasonable (note: i said reasonable for the area, we live in LA not Houston) but with the current housing crisis we have seen a lot of places going for a lot cheaper than what they were previously (apts that is) then I came across a listing for taking over mortgage payments for a foreclosed home. I gave the company a call and they told me the details and that they were federally backed and it was one of President Obama's new initiatives. Anyways from what they told me this would happen: I would take over the monthly mortgage payments on the house and the remaining years on the loan. So if the mortgage payment was 1500/mo for 10 years then thats what I would be liable for. Now if I wanted to after 6months restructure the mortgage loan to either pay it off in 15 or 20 years as opposed to 10 or try to pay it off in 5 years as opposed to 10 the bank would allow me to do that. Also any pre-existing equity in the house would be transferred over to myself, so if a 300k house had 130k already put into it from the previous homeowner(s) that equity comes into my name. From everything I was told it sounded like a nice deal and it would be nice to be able to actually own something out here in LA instead of having to rent all the time but for some reason at times its too good to be true. For all the real estate gurus and people who have experience in this sort of deal. What are the things I need to look out for? Traps, false "legalities" and all. I am a bit worried since I would be taking on a mortgage that I didnt initiate, though from what I was told I could change after 6 months. the housing situation sucks right now but there are a lot of properties going cheap and this could be a cost-effective way for me to be able to buy a house in the LA area without having to save for years just to get a decent sized down payment. Thanks in advance!
If it's not a bank I'd be leery of anything they say. And remember, equity is only there if someone is willing to buy the house for that specific price.
have you taken a look at the house after the owners have moved out? 3 months ago, i found an add on craigslist for an estate sale. turned out the lady was getting a divorce and since she wasn't getting a dime, she wanted the house stripped. she sold her furnishings, fixtures, jacuzzi, etc. we tore apart the marble floors to remove some granite top counters. the house looked like a war zone the day she had to move out.
You're acquiring debt for the house. So what's the principal balance? What other debts are there? Back taxes? This is what you're paying. Would you pay that amount for that house? Lots of houses with more debt then value. Especially in California. Those are not good deals if you have to assume all the debt! I've rarely seen good deals where the chief selling point is the monthly payment!
I heard some ad about taking over foreclosed mortgages on the radio this morning. Sounds like a good deal, but I'd weary about the areas the houses are in, especially in LA where good/bad neighborhoods are like night and day. Other than that, I have no experience in buying homes so I'll be learning as well...
It's not a foreclosure, if you are taking over somebody else's mortgage. If they foreclose on the loan, the sale of the house wipes out the loan. It's just like repoing a car. There shouldn't still be a lien on the property.
