Possible Sub2
Hi Everyone. I think we have a good one. Seller called from out of state mailer yesterday. Lives in San Diego. Bought a home here in Vegas in Dec/2000 then had a job offer too good to resist back in SD. Took the job and rented the house here to keep from taking a bath. He really likes the ideas I have presented him. Two questions. 1st- He is refinancing the house to get his equity out
, but it is a ARM (ajustable rate mortgage), looks like there will be no problem in covering this payment for now, $750.00 rent is going for $1100.00. This appears to be a good thing to me, however with my limited experience, am I walking into a possible problem with the ARM? 2nd - Seller is using equity to purchase a new home in SD. Will there be a problem for him by still having the loan on the house here in his name? I know that we have been told that it will not be a problem but I would like to be knowledgeable about this issue so that I can explain it right to him. Thanks for the help guys. I hope to be a person who can speak from experience soon and help others as you guys do. Brett
Hi Brett,
, but it is a ARM (ajustable rate mortgage) This appears to be a good thing to me, however with my limited experience am I walking into a possible problem with the ARM?"
I know I answered this on another post for you, but I'll be happy to answer here.
"1st- He is refinancing the house to get his equity out
An ARM is no problem as long as when you resell you disclose it to your new buyer. Make sure you get a copy of all the loan docs from your seller so you know all the details.
"2nd - Seller is using equity to purchase a new home in SD. Will there be a problem for him by still having the loan on the house here in his name?"
Shouldn’t be a problem. His new lender may need copies of paperwork showing the house has been sold (copy of the recorded GB&S deed). The lender will let you know what they need.
Best of luck
John (LV)
Here is my two pennies:
1. What is the term of the ARM? 2, 5? What is your exit strategy? 12 Month L/O? If you have a 5 Year ARM and are going to sell on a 12 MO L/O, I think you would be okay, but need more info... Always have the exit in mind!
2. I explain it as follows... Since we have signed a Purchase & Sale Agreement (or whatever contract you use) and have the Deed, then the Homeowner has a "Receivable" which should not affect their LTV when they apply for a new loan. I have only heard of 1 bank (word of mouth only so I am not sure how reliable), Country Wide, that would not accept this.
Good Luck!