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Old 03-19-2012, 07:47 PM
 
Location: Warren, OH
2,744 posts, read 4,232,261 times
Reputation: 6503

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Hello,

I was a homeowner for the past 25 years. Several years ago, I had to sell my home because my finances changed drastically through no fault of my own. Consequently my credit score really took a hit. At this point I cannot qualify for any type of normal mortgage. Please trust me, I have thoroughly researched and looked into it. Without a huge down payment I will not own a home again unless I look into an alternative means of financing.

I have always felt that rent with option was a scam. It really is just renting. I did come across the following:

A private financer wants $5,000 down on a foreclosed home that we found. We researched tax liens and they only owe $650.00. The asking price is $65,000. The real estate company wants to hold the mortgage for 10 years at 10%, ammoritized over 30 years.
The monthly mortgage would be $839.30 which includes the taxes and insurance. At the end of 10 years we have a balloon payment of $37,290. We would hope to refinance earlier than 10 years.
Our problem is: We would not have the deed or title, we are paying the taxes without the benefits of true ownership.

As I am writing this, I know some of you are wondering how this is ownership, with a quit claim deed (they can evict us quickly).
But in this new home, there are no invasive landlords, we can make improvements to the property, we can keep our three dogs, and they cannot sell the house out from under us, and rental of a home the size and condition of this home is at least the same, but usually more. The mortgage holder is out of state and only wants the money, and has no personal interest in the property. We like that.

We know that this is not an optimum deal, but the privacy is big issue, as well as my wife decorating, keeping our dogs and have the security that we will not have to move, unless we want to. They also want us to refinance as soon as possible.

We really like the house a lot, and our children won't have to change schools.

We are showing the contract to an attorney. Any suggestions or feedback.

Thanks, Warren Zee
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Old 04-02-2012, 08:36 PM
 
Location: Warren, OH
2,744 posts, read 4,232,261 times
Reputation: 6503
Besides paying the taxes, we would also get the tax breaks if that means anything.

Thanks, warren Zee
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Old 04-02-2012, 08:47 PM
 
Location: Cary, NC
43,266 posts, read 77,063,738 times
Reputation: 45612
Warren,
This looks like "Buy Here, Pay Here" housing.

You are smart to have the contract reviewed by an attorney, and listen to their advice.
If the seller balks at any of that, walk away. Fast.
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Old 04-03-2012, 09:14 AM
 
Location: Barrington
63,919 posts, read 46,713,615 times
Reputation: 20674
10% !!!

It's also likely you are paying a substantial premium over market value. Do yourself a favor and get it appraised 2X and take the average.
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Old 04-03-2012, 11:21 AM
 
Location: Orlando Florida
370 posts, read 1,068,272 times
Reputation: 95
Quote:
Originally Posted by warren zee View Post
Hello,

I was a homeowner for the past 25 years. Several years ago, I had to sell my home because my finances changed drastically through no fault of my own. Consequently my credit score really took a hit. At this point I cannot qualify for any type of normal mortgage. Please trust me, I have thoroughly researched and looked into it. Without a huge down payment I will not own a home again unless I look into an alternative means of financing.

I have always felt that rent with option was a scam. It really is just renting. I did come across the following:

A private financer wants $5,000 down on a foreclosed home that we found. We researched tax liens and they only owe $650.00. The asking price is $65,000. The real estate company wants to hold the mortgage for 10 years at 10%, ammoritized over 30 years.
The monthly mortgage would be $839.30 which includes the taxes and insurance. At the end of 10 years we have a balloon payment of $37,290. We would hope to refinance earlier than 10 years.
Our problem is: We would not have the deed or title, we are paying the taxes without the benefits of true ownership.

As I am writing this, I know some of you are wondering how this is ownership, with a quit claim deed (they can evict us quickly).
But in this new home, there are no invasive landlords, we can make improvements to the property, we can keep our three dogs, and they cannot sell the house out from under us, and rental of a home the size and condition of this home is at least the same, but usually more. The mortgage holder is out of state and only wants the money, and has no personal interest in the property. We like that.

We know that this is not an optimum deal, but the privacy is big issue, as well as my wife decorating, keeping our dogs and have the security that we will not have to move, unless we want to. They also want us to refinance as soon as possible.

We really like the house a lot, and our children won't have to change schools.

We are showing the contract to an attorney. Any suggestions or feedback.

Thanks, Warren Zee
This is not new. When interests were in teens during the 1980s the seller typically carried the loan. Talk to a mortgage broker and ask for private loan or "inhouse" financing at the terms you outlined you could get a conventional loan at higher rate but without too many strings attached. Hope this helps.
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Old 04-03-2012, 05:54 PM
 
Location: Warren, OH
2,744 posts, read 4,232,261 times
Reputation: 6503
Quote:
Originally Posted by MikeJaquish View Post
Warren,
This looks like "Buy Here, Pay Here" housing.

You are smart to have the contract reviewed by an attorney, and listen to their advice.
If the seller balks at any of that, walk away. Fast.
The mtg people told us to have an attorney look over the contract. We've had somethings tweaked already, like two year balloon to 10 year balloon and the tax benefits. We're in Pa. Thanks. Warren
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Old 04-03-2012, 06:17 PM
 
4,483 posts, read 9,288,829 times
Reputation: 5770
I'd like ten percent on my money, too - but that's way too much. We are planning to sell our rental to the tenants, and we are only going to charge them about 4%.

If you can get them to agree to 6%, they're still getting a good deal. Where else can they get 6%?
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Old 04-04-2012, 09:00 AM
 
Location: Raleigh, NC
19,429 posts, read 27,815,202 times
Reputation: 36092
Quote:
Originally Posted by sll3454 View Post
I'd like ten percent on my money, too - but that's way too much. We are planning to sell our rental to the tenants, and we are only going to charge them about 4%.

If you can get them to agree to 6%, they're still getting a good deal. Where else can they get 6%?
You have no idea what the financial history and current financial position of the OP. Obviously, there is a big problem in his history, which he honestly admits. If that history includes federal tax liens or something equally ominous, 10% isn't too much for the lender to accept the risk.

To the OP: if there are tax liens involved in your credit history, I'd suggest you get legal advice to address the potential of IRS putting a lien against your house once you take title. That alone may make renting a better alternative.

Hope it all goes better for you and your family.
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Old 04-10-2012, 02:08 PM
 
Location: Warren, OH
2,744 posts, read 4,232,261 times
Reputation: 6503
We have no tax liens, but have a judgement of about $8,000. We can probably put the house in our son's name who is 18.
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Old 04-10-2012, 07:04 PM
 
Location: Raleigh, NC
19,429 posts, read 27,815,202 times
Reputation: 36092
Quote:
Originally Posted by warren zee View Post
We have no tax liens, but have a judgement of about $8,000. We can probably put the house in our son's name who is 18.
I really think you'd be better off renting. If said son does something stupid (sorry, but it happens) or gets married, he owns YOUR house. Does that sound like a good idea to you????? Not me.

Rent. Pay off the judgment. Save some money for a down payment. Save some money for an emergency fund. Then move forward.
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