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Old Today, 12:25 PM
 
6 posts, read 241 times
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Hello All,

I live in Illinois, and my family and I live in a house that we have a contract for deed for. The contract was signed in April of 2018 and goes until April of 2020. At that time, we plan to purchase the house. The house is currently financed to our seller through a mortgage company.

We have had a situation that has come up where recently, the seller has asked me if we are able to purchase the home early, because they are having financial problems and "are on the verge of losing their families home," which is also financed.

They confirmed that the mortgage on the house we have on contract is current, and that our monthly payments have been paying that mortgage. But their family home is very behind on payments.

My question is: How could them potentially losing their home effect our contract to purchase this one, particularly since they do not own the property outright? Is there a chance we could lose our house/contract?

Thank you for your time and consideration and any advice.

-D
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Old Today, 01:17 PM
 
Location: The Triad (NC)
29,174 posts, read 63,403,155 times
Reputation: 33520
Quote:
Originally Posted by Daligator17 View Post
,
I live in Illinois, and my family and I live in a house that we have a contract for deed for.
The house is currently financed to our seller through a mortgage company.

The contract was signed in April of 2018 and goes until April of 2020.
At that time, we plan to purchase the house.
Is everything going well at YOUR end? Have you applied for the mortgage? Approved?

Quote:
...the seller has asked me if we are able to purchase the home early,
because they are having financial problems and "are on the verge of losing their families home,"
Again... COULD you do that?
Being able to opens all sorts of possibilities. Not being able to pushes you to a corner.

Quote:
They confirmed that the mortgage on the house we have on contract is current,
and that our monthly payments have been paying that mortgage.
I'd want to see the bank documents that prove this assertion.

Quote:
But their family home is very behind on payments.
^^ Especially in light of this statement.
Quote:
My question is: How could them potentially losing their home effect our contract to purchase this one...
Is there a chance we could lose our house/contract?
YES. It could all blow up on you.
The facts are that it's RARE for these deals to not have something blow up before they close.

Quote:
Thank you for your time and consideration and any advice.
What does your (RE specializing) lawyer say? Don't have one? Fix that tomorrow.
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Old Today, 01:39 PM
 
6 posts, read 241 times
Reputation: 10
Quote:
Originally Posted by MrRational View Post
Is everything going well at YOUR end? Have you applied for the mortgage? Approved?

Again... COULD you do that?
Being able to opens all sorts of possibilities. Not being able to pushes you to a corner.

I'd want to see the bank documents that prove this assertion.

^^ Especially in light of this statement.
YES. It could all blow up on you.
The facts are that it's RARE for these deals to not have something blow up before they close.

What does your (RE specializing) lawyer say? Don't have one? Fix that tomorrow.
1. We are not able to get approved right now. We are on track to have that done and lined up around February/March.

2. If/when the home falls behind on payments on the contracted house, they send documentation to the house. We did receive a notice in January of this year, which i addressed with the seller, but we have not received anything since then. I suppose it's possible they were maybe able to subvert the mail from coming here.

3. I do not have a RE lawyer or attorney. Looks like I should get that lined up...

Thanks for your help. I've never been through this and to get close to the end of our contract and to have this has us feeling pretty distraught.
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Old Today, 01:53 PM
 
3,619 posts, read 7,820,379 times
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What is preventing you from getting a mortgage? I'd think you could get a much-improved deal from the seller?
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Old Today, 01:58 PM
 
6 posts, read 241 times
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Quote:
Originally Posted by Pfhtex View Post
What is preventing you from getting a mortgage? I'd think you could get a much-improved deal from the seller?
The down payment is the main obstacle. We are first time home buyers, and I am a contractor (less than 2 years,) so we have been using her credit. We were planning on being able to use the extra cash from tax refund to help with the down payment.
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Old Today, 02:36 PM
 
3,619 posts, read 7,820,379 times
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Quote:
Originally Posted by Daligator17 View Post
The down payment is the main obstacle. We are first time home buyers, and I am a contractor (less than 2 years,) so we have been using her credit. We were planning on being able to use the extra cash from tax refund to help with the down payment.
Can you tell me how much of a down payment you have been told is required? There are several zero-down loan programs.
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Old Today, 02:38 PM
 
Location: Raleigh NC
10,002 posts, read 7,528,140 times
Reputation: 8604
presumably you've already talked to a couple of lenders to see how much downpayment you need, exactly how much time on your job, etc?
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Old Today, 02:53 PM
 
6 posts, read 241 times
Reputation: 10
We were told 6000 for a downpayment with closing costs. I have spoken with several lenders about 0 down USDA loans, but have been told we do not qualify for the credit score needed (generally 620-640+.) Her credit score is around 600 mark. We have been improving it but were counting on another 6 months to help that score go up more. So the fallback from that has been an FHA option, but then the downpayment problem comes up. The point being that either way we were looking at being able to be approved one way or the other come Spring time, but at this point can't quite get either.

She has been employed where she's at for close to two years. As previously mentioned I am a 1099 contractor employee (and have been doing this for less than 2 years.)
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Old Today, 04:41 PM
 
3,619 posts, read 7,820,379 times
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If you are on a contract for deed, has any amount from your monthly payments been deemed to go toward "Down Payment?"

Clearly you are in a situation where adjustments might be made such that the seller pays your closing costs.

What is the purchase price?
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Old Today, 04:51 PM
 
Location: Boise
614 posts, read 594,834 times
Reputation: 1344
See if the seller will put you on title. You can then call it a refinance and use current value instead of price. You might not need a down payment if current value is high enough.

Find a local lender who knows how to do it and get the home into your name before the seller defaults. It sounds like its just a matter of time.

Whenever I talk to a buyer about seller financing, I always recommend a long term escrow service. They will take your payment, make any underlying payment the seller owes and send the seller the difference. This prevents the seller from spending it before they pay the mortgage.

Good luck, I hope it turns out ok for you.
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