Advice on assuming a home & mortgage (mortgage broker, credit)

[ConsideringLA]

We’re very close to striking a deal on a property. The home needs some TLC inside, but is in an excellent area with great schools with a great floor plan. Financially, the home would break even as a rental and we intend to stay there for at least 10 years.

The homeowner passed away and had no next of kin. The seller on the home is the trustee of the estate and has been trying in vain to sell the home. There are 2 mortgages, both adjustable, both current - though the seller is prepared to let the home go back to the bank after nearly a year on the market with price declines that are approaching short-sale territory.

We spoke with the seller and offered to take over the mortgages - 2 reasons for this, 1) we don’t have cash for a down (but have excellent credit and income); 2) the balance on the mortgages are below recent comps for the neighborhood. We intend to have a full inspection and appraisal on the home before signing on the dotted lines.

We spoke to a reputable appraiser and an honest mortgage broker and verified comps to arrive at value (less the TLC factor) and confirmed we can refi to a single fixed rate loan (provided there is no cash-out).
We are completely inexperienced in this area—and so are most real estate agents. The seller’s agent has never done this before, and navigating through a sea of agents is treacherous at best.

The seller confirmed the first is assumable, but requires a fee. We have not yet contacted the bank on the second. Both notes are with major banks.

I am seeking advice on the following:

- Is it best to let the home hit NOD status before doing this type of transaction? We want to eliminate the transfer fee as it will likely add to the balance on the loan or be an out-of-pocket expense, and the bank was less enthusiastic about an assumption when they saw the note wasn’t in default (crazy...).
- Would you work with an RE broker or attorney to do this type of transaction?
- Would the trustee simply deed us the home and mortgages or record a sale or both? What would the property tax basis on the home be?
- Would you approach the first TD or HELOC bank to refi upon/subsequent to assumption?

Thanks for any additional advice or pitfalls in this area…

[mono#9]

You should try asking this in the Real Estate Forum.

[sonarrat]

Or better yet the Mortgage forum.. since most of the questions are about that.