TAKE OVER PAYMENTS

 

TAKE OVER PAYMENTS

 

Is this the real estate market of the near future?  I ran across a property the other day that you could literally and legally take over the payments of the loan.  The property in question is worth, in my opinion, about $225,000.  There is a first FHA loan on the property for $250,000 and is assumable with a $250.00 fee to the bank.  I have proposed to the owner that he sell my client the home for $225,000, paying down the current loan to that amount and the normal escrow and commission charges.  YES, he will need to bring some money into escrow and YES he will need to pay $25,000 to bring down the loan balance, but that saves his credit!  He also, I was told by the other agent, that he makes about $150,000 a year and might just rent it out?  He can rent it out for about $1400 a month and his payments PITIA are about $2600 a month.  A $1200 a month cash flow NEGATIVE.  Not a great plan to rent it out.

 

Is this the real estate market of the future?  Well, if someone purchases the same home at $225,000 and is an FHA buyer with a loan of $217,000 @ 4.5% interest.  If the value of this home only appreciates 5% over three years this home is NOT worth much more than the current loan.  I think that a new buyer can come in with assuming the existing loan and putting down the difference in price or even have the seller take back a second.  I see this to be the next wave of selling your home quickly.  What do you think?