Alienation Clause
Or a due on sale clause
"A lender may call the entire note if the property is transferred from the original owner to someone else"
When you purchase a property in preforclosure you transfer title right?
Sooner or later the bank is going to know.
So then How do you get the property?
NG
typically when I purchase a preforeclosure, I don't assume the seller's mortgage. I either do a 14-30 day closing and get a traditional mortgage, or if they are close to foreclosure I'll get a hard money lender to finance it and close in 3-7 days.
I use the new loan that I take out to pay off the seller's mortgage.
If the sellers loan is assumable, you might be able to contact the bank and just takeover their payments.
-Joe
OK so what is 3-7 day closing
and what do you mean by a traditional mortgage?
NG
How are you trying to purchase this property?
If your making up back payments and leaving the loan in the sellers name you can take it sub2 or lease option.
Traditional mortgage: go to the bank or lender and get a loan
3-7 days. How fast a hard money lender could close .
[ Edited by ncboater on Date 10/22/2004 ]
Sorry,
traditional mortgage is going through a bank and usually takes 21-30 days to fund the loan.
hard money lenders are like banks but they fund faster (3-7 days) because they have less red tape and closing requirements, but they are more expensive.
The lease option and sub2 methods are great too, as long as the owner is not so much behind on payments that they are about to be foreclosed on. I have bought homes at foreclosure that were under contract to be sold (I didn't know at the time). The trustee sale (foreclosure) cancelled their agreement and I owned the house. I then sold it to the people who were trying to buy it in the first place, but I didn't have to.
I guess my point is, know what your timeframe is if you are buying a preforeclosure. You may invest time and money only to have the deal auctioned off before you close!
-Joe