Advice needed

I have offered to buy my sister's home on contract this summer. We
have a few questions, though, and would appreciate any advice.

1. How will this affect their existing mortage?
2. How will this affect their buying power?

I had to declare bankruptcy last August and there's no way I could
qualify for traditional financing right now. Our plan is to have me
refinance it in Sept of 2007 (when the BK should no longer affect my
borrowing power) and pay them the balance + their equity then.

Thanks in advance - please advise!
Jamie

Re: Advice needed

In article <>,
"IllMetByMoonlight" <> wrote:

> I have offered to buy my sister's home on contract this summer. We
> have a few questions, though, and would appreciate any advice.
>
> 1. How will this affect their existing mortage?
> 2. How will this affect their buying power?
>
> I had to declare bankruptcy last August and there's no way I could
> qualify for traditional financing right now. Our plan is to have me
> refinance it in Sept of 2007 (when the BK should no longer affect my
> borrowing power) and pay them the balance + their equity then.

The house has to be free and clear before they can sell it
to you. A contract for deed would be meaningless since they
cannot give you a valid deed given the mortgage on the
property. And when they move out and you move in, the loan
is mostly likely callable since the loan was most likely for
an owner-occupied house.

If you think that 2 years is going to be enough to clear
up a bankruptcy from your credit history, then you are
really optimistic. I'd expect that you will be paying about
twice the interest rate as any human with good credit.

What is the hurry? Why not take advantage of the great
rental market right now until you can clear up your
financial mess and save up some down-payment?

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: Advice needed

New question, could they lease it to me?

> The house has to be free and clear before they can sell it
> to you. A contract for deed would be meaningless since they
> cannot give you a valid deed given the mortgage on the
> property. And when they move out and you move in, the loan
> is mostly likely callable since the loan was most likely for
> an owner-occupied house.

The loan is an ARM - it may be assumable (by anyone else) and I don't
know if it has a due-on-transfer clause.


Could they lease it to me?

> If you think that 2 years is going to be enough to clear
> up a bankruptcy from your credit history, then you are
> really optimistic. I'd expect that you will be paying about
> twice the interest rate as any human with good credit.

Two years is what a mortgage specialist at my bank told me. I could
get one right now and pay way too much and only 75% LTV.

> What is the hurry? Why not take advantage of the great
> rental market right now until you can clear up your
> financial mess and save up some down-payment?

I want to move out of my current apartment because the managers are
hellacious, the walls are so thin I can hear my neighbors talking on
the phone and the rent is very very high as this was supposed to be a
"luxury" apartment. I am a motivated buyer, she said sadly.

Jamie

Re: Advice needed

IllMetByMoonlight wrote:
>
> I have offered to buy my sister's home on contract this summer. We
> have a few questions, though, and would appreciate any advice.
>
> 1. How will this affect their existing mortage?
> 2. How will this affect their buying power?
>
> I had to declare bankruptcy last August and there's no way I could
> qualify for traditional financing right now. Our plan is to have me
> refinance it in Sept of 2007 (when the BK should no longer affect my
> borrowing power) and pay them the balance + their equity then.

You could do that with a personal contract, but I suspect the best
way is to transfer the title into a land trust and write a contract to
change you ro the beneficiary of the trust once you've paid off the
personal contract. Then you make the payments in a wrap-around
and at some point you'll build up enough equity and credit rating
that you can refinance the whole thing cleanly.

Re: Advice needed

Forget about when you declared bankruptcy -- the question is when it
was discharged. What date was that?

Interest rates rates with a BK are usually a couple percent higher than
without, all else being the same.

Seth




Doug Freyburger wrote:
> IllMetByMoonlight wrote:
> >
> > I have offered to buy my sister's home on contract this summer. We
> > have a few questions, though, and would appreciate any advice.
> >
> > 1. How will this affect their existing mortage?
> > 2. How will this affect their buying power?
> >
> > I had to declare bankruptcy last August and there's no way I could
> > qualify for traditional financing right now. Our plan is to have me
> > refinance it in Sept of 2007 (when the BK should no longer affect my
> > borrowing power) and pay them the balance + their equity then.
>
> You could do that with a personal contract, but I suspect the best
> way is to transfer the title into a land trust and write a contract to
> change you ro the beneficiary of the trust once you've paid off the
> personal contract. Then you make the payments in a wrap-around
> and at some point you'll build up enough equity and credit rating
> that you can refinance the whole thing cleanly.

Re: Advice needed

Forget about when you declared bankruptcy -- the question is when it
was discharged. What date was that?

Interest rates rates with a BK are usually a couple percent higher than
without, all else being the same.

Seth




Doug Freyburger wrote:
> IllMetByMoonlight wrote:
> >
> > I have offered to buy my sister's home on contract this summer. We
> > have a few questions, though, and would appreciate any advice.
> >
> > 1. How will this affect their existing mortage?
> > 2. How will this affect their buying power?
> >
> > I had to declare bankruptcy last August and there's no way I could
> > qualify for traditional financing right now. Our plan is to have me
> > refinance it in Sept of 2007 (when the BK should no longer affect my
> > borrowing power) and pay them the balance + their equity then.
>
> You could do that with a personal contract, but I suspect the best
> way is to transfer the title into a land trust and write a contract to
> change you ro the beneficiary of the trust once you've paid off the
> personal contract. Then you make the payments in a wrap-around
> and at some point you'll build up enough equity and credit rating
> that you can refinance the whole thing cleanly.