"Subject To" OR Wrap Around Mortgage And HOW?
House appraised for : 173K
Selling for : 169K ( OUTRIGHT BUYOUT)
Non-assumable Refi-Loan on the house: 120K ( @ 7.375 over 30 years-fixed)
If I do owner financing then the selling price is: $ 186K .
Should I sell on a " subject to" and take up a 2nd lien position for my end of the equity of 66K on simple interest with a balloon payment at the end of 2 years ( creating a note) and taking a 10% down payment on the whole amount?
OR
Should I do a "Wrap around mortgage" at a higher interest rate that takes care of my loan and my equity at the higher price of the house @ 9%. That is 186K @ 9% amortized over 30 years.
How do I deal with a due on sale clause?
Should I deed the property over to a trust and assign the trust to the new buyers. They will now have title to the property with their name not anywhere on public record, avoiding the Due on Sales clause. I would have to get permission from my lender to put the proeprty in a trust).
WILL THE BUYER BE ABLE TO REFINANCE IN HER OWN NAME AT THE END OF 2 YEARS TO CASH ME OUT??
[ Edited by Smagnolia on Date 02/18/2008 ]
You give your buyer total control of the property but none of the liability for the underlying mortgage. Your buyer can put you into foreclosure if they quit making the loan payments.
Why would you take such a great risk when you could sell via other safer and more profitable methods?
[addsig]
I would sell the darn thing.... With 66k in equity why mess around with a wrap, LC or Trust?
That strategy is reserved for non equity transactions and ones where you are not at risk.
And "King" is correct never do a sub2 when youre on the note.
Just because it is a great way to buy doesnt mean you should sell that way.
If the payments are current, how is it possible that the property is in foreclosure?
Unless the property was held in trust with the children as beneficiaries upon the parents death, I would think that the children can not legally transfer title unless the property has been through probate.
Your ability to work a subject to deal may depend upon the probate status of the property.
If there is no probate issue, and the property is about to go to foreclosure, why not just bring your own cash and/or financing to the settlement table and work a short sale? You may get the property cheaper than you might by reinstating the existing mortgage and taking title subject to.