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Old 08-27-2013, 10:17 AM
 
11 posts, read 17,510 times
Reputation: 13

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Hi everyone,

My boyfriend and I are in a rather unique scenario and I need some advice. I work for a wealthy individual who has helped employees in the past with loans to purchase homes. He bought an apartment at the beginning of the year for a family member who was moving to NY. Her job relocation fell through and at the time my boyfriend and I were looking to move so he offered us the vacant apartment.

He bought it under market and offered it to us for the same price he paid. It's a great deal for NY and we want to purchase it but my boyfriend has his own company and is self employed and needs 2 years for tax returns to get a mortgage. He feels confident he can mortgage the $468,000 once his tax returns are complete. We have the necessary $117,000 for the down payment but we would have to wait until February for his tax return, then apply for the mortgage and then close. All of that takes time obviously.

Today my boss offered to loan us the full amount so we can close in November, own the apartment, start paying the maintenance, etc and then whenever my boyfriend's tax returns are ready in the new year we can refinance. I'm concerned the interest rate is higher for refinancing and I'm not so sure how this would work exactly?

Any ideas on the best way to proceed with this transaction? Should we wait to just get a mortgage or go with the loan for a few months?
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Old 08-27-2013, 02:07 PM
 
3,806 posts, read 8,425,729 times
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Can of worms. What would be the potential terms of repayment, and how would this be documented? Will there be a payoff amount? Lenders don't pay individuals who informally loan cash. You would have to do a cashout refinance, at 80% or less of the PRICE of the home, not the value, in the first 6-12 months of ownership, depending on the lender.

So this pushes your refi date to about April or later. The value of the home would have to support that about 75% of the cash out will pay the guy off entirely, as you will likely have NY Mortgage Tax, property taxes, insurance and hoa, and closing costs to pay with the loan proceeds. So it should be a great deal, value wise.

Budget for a 6% interest rate as a (dear God, hopefully) worst-case scenario.

Last edited by Pfhtex; 08-27-2013 at 03:33 PM..
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Old 08-27-2013, 03:36 PM
 
4,567 posts, read 9,335,253 times
Reputation: 6664
Quote:
Originally Posted by bm12484 View Post
Today my boss offered to loan us the full amount so we can close in November, own the apartment, start paying the maintenance, etc and then whenever my boyfriend's tax returns are ready in the new year we can refinance. I
Too complicated. Buy the house from him owner financing. He transfers the deed to you, you sign a mortgage for xxxx years and you pay him a monthly payment just like a bank. Clean.
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Old 08-27-2013, 09:26 PM
 
Location: Brentwood, Tennessee
49,990 posts, read 49,820,370 times
Reputation: 98359
Quote:
Originally Posted by 399083453 View Post
Too complicated. Buy the house from him owner financing. He transfers the deed to you, you sign a mortgage for xxxx years and you pay him a monthly payment just like a bank. Clean.
Yep, quit-claim.
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Old 08-28-2013, 04:47 PM
 
Location: Just south of Denver since 1989
11,493 posts, read 31,164,116 times
Reputation: 8118
you can get a real warranty deed and title insurance - not a quit claim.
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Old 08-28-2013, 08:36 PM
 
Location: Scottsdale, AZ
2,119 posts, read 4,452,010 times
Reputation: 3183
Quote:
Originally Posted by 399083453 View Post
Too complicated. Buy the house from him owner financing. He transfers the deed to you, you sign a mortgage for xxxx years and you pay him a monthly payment just like a bank. Clean.
Yes, this is the way to do it. Have the Seller give you a mortgage at competitive rates (called a Seller Carryback). It works just like a regular mortgage only the Seller is the bank. You can transfer title with a standard warranty deed and you can either make payments directly to the seller or contract with an escrow company to handle it for a small fee. It will be a good deal for the Seller since he will be earning interest on his money and you will be protected since the home is in your name and it is not a personal loan.
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