Deal too good to be true?
I have found myself in a difficult financial situation, and I currently own a home that has equity that I can't touch because I can't qualify to get a new loan. An investor has approached me & has proposed to me an amazing strategy that would not only save me but "create alot of cash for me & him". He has proposed that if I allow him to assume my loan & deed him my property that he would sell the property back to me through a 2 year lease contract with an option to buy at the end.
He would do this while holding a note that would include my first & a second (wrap-around) that would allow me to capitalize on the equity in my house. He would then immediately negotiate the buy out of that note with a financial institution that allows him to walk away with up to 85% of the entire wrap-around mortgage & I would continue to make my payments as usual to a new lender. He is still responsible for the loan for the next 2 years until I buy it back but I have incentive to do so since I live there.
He would then give me a significant portion of that cash that he gets for simply being in the middle as an incentive to allow him to orchestrate this plot. Is this legal, ethical & possible?
Please can someone help me determine of this is credible or am I going to make a big mistake?
This idea definately does not sound like the best idea to get at the equity in your home.
If you do have a good amount of equity in your home you should be able to get a no doc/ no income check loan. This loan may have a higher interest rate than most other mortgages, but it will cost you a lot less than that scheme you described.
I would not be so quick to sign my house over to someone.
Keep looking for a lender. You should be able to come up with something although it may be a higher rate. I think it would be worth it.
Just my opinion.
Good luck
-Adam