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Socratic Moron posted:Yes, but I want to wait until an offer is accepted and inspection is ok before I send her the funds (or to escrow) as I don't want to deal with the money getting send back and forth. But to do that we need (I assume) to prove that I have that cash and am willing to lend it to her? This is a totally different animal of a transaction now and I don't have a lot of insight for you. I will say it's going to be a HELL of a lot easier since the bank will not be involved, they're the ones who cause problems. Being a cash deal, it's now just a transaction between parties. You simply need to have her make an offer on the property, they will sign the purchase agreement (if accepted) and your sister will be obligated to close the transaction in a certain amount of time (unless extended) or lose her earnest money, depending on how the PA is written. The seller won't care where the money came from, how she is paying it back, or anything. The only thing he'll be concerned of is that the money arrives when it is supposed to. I SUSPECT, that all you need to have her do is make the offer (using an agent? may want to consider, it's 'free' for a buyer, sort of) and get her the money before closing. Typical close period is 30 days, but in a cash deal, that will be much shorter, giving ample time for an inspection and transferring of funds.
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Aug 5, 2011 12:59
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My parents are selling their house in one year. I need to buy a house in one year. I would need a mortgage from a lender, however, because I can only pay about half of the total cost of the house as a down payment. What sort of advantages and disadvantages come from buying a house directly from another private party that you know well (and, assume for the purposes of this question, trust completely)?
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Aug 5, 2011 14:25
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Feces Starship posted:My parents are selling their house in one year. I need to buy a house in one year. Only the obvious, really. They will want to give you a better price than a stranger and will be more flexible if there are any issues through the approval process. Provided the house isn't going to be sold in a short sale, you should not have any problems. Aside from that, the bank will treat it like any other purchase.
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Aug 5, 2011 14:40
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Feces Starship posted:My parents are selling their house in one year. I need to buy a house in one year. They can't make a short sale to you. If they have a lot of equity, or have the house entirely paid off, it should be fine and you don't have to worry about it, but if they may need to make a short sale, I don't think it can be to someone they know and trust completely. I found a link which goes into some details about it, but I can't really vouch for accuracy or completeness. http://homebuying.about.com/od/shortsale/f/arms-length-affidavit.htm
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Aug 5, 2011 15:53
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Fire Storm posted:DO NEVER... get a mortgage and need to default on. Is your state a non-recourse state?
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Aug 5, 2011 16:37
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Shipon posted:Is your state a non-recourse state? Oh, and I forgot to add this, but yes I did confirm the sheriffs sale date with my lender (Citimortgage)
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Aug 5, 2011 17:51
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Fire Storm posted:Michigan, and I'm pretty sure we're non-recourse, so at least I have that going for me, and I have a place to live so I am not going to fight this at all. I was hoping for a few more months, but I can live with this.
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Aug 5, 2011 17:54
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gvibes posted:I think Michigan is recourse. Then again, if it's anything like Illinois, the lenders just haven't been seeking deficiency judgments. Michigan is definitely a recourse state, there are only two that aren't. California and another I cannot recall at the moment. Lenders have not been seeking deficiency judgments, but they have the ability to do so and extend their ability to do so for a total of around 20 years. There is no free lunch... there is a real poo poo storm coming in 5-10 years when all these banks start going after everyone who short saled thinking they were free and clear... Good luck buddy.
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Aug 5, 2011 18:22
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TraderStav posted:Michigan is definitely a recourse state, there are only two that aren't. California and another I cannot recall at the moment. Lenders have not been seeking deficiency judgments, but they have the ability to do so and extend their ability to do so for a total of around 20 years. Minnesota is non-recourse as well.
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Aug 5, 2011 19:00
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Socratic Moron posted:Yes, but I want to wait until an offer is accepted and inspection is ok before I send her the funds (or to escrow) as I don't want to deal with the money getting send back and forth. But to do that we need (I assume) to prove that I have that cash and am willing to lend it to her? Just to add to what others said: making a cash offer puts you (or rather your sister) in a very good position relative to buyers who must get a mortgage. She can probably bid lower than other bidders and still win. Sellers love a cash offer because they know that there isn't a bank who might cause delays, decide the house isn't worth enough to secure the mortgage, or discover something in the buyer's disclosures that they didn't notice during pre-qualification and rescind their loan offer. For example: the first house my wife and I bid on, we bid $235k (or something near that, I don't recall exactly), and lost to a cash offer of $210k. The seller (it was an REO) did not offer us a counter-offer either. We suspected there were additional bids as well. All that said: just because you have the freedom of cash, doesn't mean you should skimp on the due diligence. Do the inspections, get an independent appraisal, and don't pay more than the appraised value. Also: we are all assuming you will put your loan to your sister in writing, and understand that when this much money is involved, there is the potential for it to ruin your relationship. Hopefully you're fully aware. Consider running your contract past a lawyer. Advise your sister to do the same.
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Aug 5, 2011 20:04
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Long story short, I closed on my late-1800s house in December (after putting a bid in by October  ), tore up the carpet, found the subfloor ruined and the joists running the wrong way, tore down the walls and found pretty much everything wrong including windows that all but fell out, and ended up just gutting the entire house except for one room.My original plan was only to spend $2-$3k to update the house. It's cost me over $25,000 so far (thank you, Mom!) for a full gut and there's still no insulation or drywall up yet, but this old house will eventually be bulletproof and, more importantly, to code. Do I have any recourse for a seller's listing that flat-out lied about the roof being only 5 years old (it's clearly not, and leaks), the seller doing DIY fixes that were fire hazards (naked wire in loose-fill insulation, anyone?) and toxic (one potable water pipe to the shower was replaced with lead), and/or the inspector who told me the house was in mostly good condition, said the roof was good, and missed so much crap that became obvious once I started ripping up carpet and drywall? It's been 8 months since I started renovations... Yeah. There's a reason this house was on the market for nearly 3 years. DO NEVER BUY OLD HOUSES unless you got renovation-money. But hey, you can't beat the workmanship on these things, and the ZEO said that if there's a hurricane, he's coming to my house, that's how strong it is.
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Aug 5, 2011 20:46
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daggerdragon posted:Long story short, I closed on my late-1800s house in December (after putting a bid in by October You got that slightly wrong. You meant to say: "Buy an old home, but DO NEVER LOOK UNDER THE CARPET/PAINT."
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Aug 5, 2011 21:39
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There are legal disclosure requirements, yes. It is also obviously illegal to put false statements on a contract. I doubt the inspector can be held liable, though. I suspect the rules and laws vary from one state to the next. You may or may not have recourse. I strongly recommend consulting with a lawyer experienced in this area.
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Aug 5, 2011 21:43
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Feces Starship posted:My parents are selling their house in one year. I need to buy a house in one year. Shouldn't be any real problems from the bank, unless as noted above your parents were in a short sale. Buying from your parents is a non arms length transaction which is not permitted on short sales due to being a bail out. Assuming you don't have any realtors on the transaction your bank may have some extra requirements due to being for sale by owner, but they probably won't be anything serious. It's not terribly uncommon for family members to buy/sell homes from each other, as long as it doesn't come across as a bailout it's usually not a big deal.
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Aug 6, 2011 06:00
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As a clarification to my question, my parents own their home outright. There is no mortgage. My comment about the mortgage in my original post was that I myself would need a mortgage because I can only pay my parents about half of what they'd ask with the money I have on hand.
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Aug 7, 2011 20:11
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Here's my situation: my parents have offered to sell me a house in the mid-West for about $180k (2/3rds of what it is appraised for.) It belonged to my grandparents and I've always wanted it. The downside is that I currently own a house, with my wife, out in California. We bought it at the height of the housing market. Its now worth about $100k less than what we paid for it, and we have no equity in it. Is there any reasonable scenario where we could get rid of the house in Cali and buy the other one? It seems that if we walk away from the California house, no one is going to finance us for another? So are there any other options to consider?
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Aug 8, 2011 16:52
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Oxford Comma posted:Is there any reasonable scenario where we could get rid of the house in Cali and buy the other one? It seems that if we walk away from the California house, no one is going to finance us for another? So are there any other options to consider?
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Aug 8, 2011 17:05
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gvibes posted:If your income can support two mortgages, you could buy the other one, then walk away from the place in Cali. I'm not 100% sure but that's something to look into. 
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Aug 8, 2011 17:08
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So what will all this downgraded US credit rating nonsense do to the housing market? I imagine it cant be good. Are we looking at increased interest rates?
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Aug 8, 2011 17:51
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Oxford Comma posted:I'm not 100% sure but that's something to look into. Note that California is a non-recourse state, which is a benefit to you. The bank can only take the house and give you a credit hit for the foreclosure. In other states they can seek deficiency down the road. (contact a real-estate attorney to verify)
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Aug 8, 2011 18:19
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jerkstore77 posted:So what will all this downgraded US credit rating nonsense do to the housing market? I imagine it cant be good. Are we looking at increased interest rates? Difficult to say, but counter-intuitively, interest rates are DOWN today. Likely because the US debt is already so ubiquitous throughout the world as the standard and the US has the ability to inflate the dollar and make the debt payments. We'll never default, but our dollar will be worth nothing.
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Aug 8, 2011 18:20
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TraderStav posted:Note that California is a non-recourse state, which is a benefit to you. The bank can only take the house and give you a credit hit for the foreclosure. In other states they can seek deficiency down the road. Can you explain a bit more what this means, exactly (before I call up my attorney, of course.)
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Aug 8, 2011 18:37
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Oxford Comma posted:Can you explain a bit more what this means, exactly (before I call up my attorney, of course.) What this means is that if you owe 100,000 on the house and the house is only worth 75,000, the bank could take the house back and then sue you for the difference. Thus, even though you would be out from under the house, you would still have 25,000 worth of debt hanging over your head, though it would be unsecured at that point. This is true for deed in lieu, short sales, and foreclosures, so recourse vs. non-recourse is a significant deal. One thing to keep in mind, though, is the tax side of it: if the debt is forgiven, it can/will be treated by the IRS as income, so you need to be prepared for that hit down the road. On the other hand, I would think that the gains could be offset by the loss on the property, but this side is beyond my knowledge. Talk to your attorney about this because I don't know all the implications.
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Aug 8, 2011 18:57
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Oxford Comma posted:Can you explain a bit more what this means, exactly (before I call up my attorney, of course.) e;f;b Say you took out a $300,000 loan on a house and go into foreclosure. It is sold for $200,000. If you're mortgage is at $290,000 (say you paid down 10k) in a RECOURSE state the bank can sue you personally for the remaining $90,000 remaining in the loan. In a NON-RECOURSE state they cannot come after you for the remaining loan balance and have to eat the $90,000 loss. alreadybeen fucked around with this message at 19:06 on Aug 8, 2011 |
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Aug 8, 2011 18:58
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Oxford Comma posted:Can you explain a bit more what this means, exactly (before I call up my attorney, of course.) When you purchase a home, you put your home as collateral, simultaneously you sign a promissory note (at least in 'recourse states') that personally binds you to the obligation of the mortgage. This means that in the case of default, the bank can take the house AND pursue a judgment against you in a court of law for the difference between what they were able to sell it for (or that you did in a short sale) and what you owed (plus fees and penalties). In California, they cannot seek the deficiency judgment, only take the house and wave goodbye. So far, banks have not, in great frequency, pursued deficiency judgments on homeowners for a variety of reasons (likelihood to collect, costs to collect, ability to prove ownership of the debt due to lost documentation, public perception, etc) but they are able to extend this right to seek deficiency up to 20 years in some states. I am a FIRM believer that once all of this mess passes by, in about 10 years or so, these banks will begin to seek these judgments. Why wouldn't they, if they think that they can collect? This will mean that everyone who thought that they were high and dry after shorting/foreclosing on their dead-weight property will get a real shock down the road. This is of course, all speculative. Oh, also, if the bank 1099s you, (forgives the debt, and sends you the notice of a potentially taxable event) they cannot seek deficiency later. Much of this doesn't apply to you, since you're in a non-recourse state! It's a good thing!
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Aug 8, 2011 19:02
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TraderStav posted:but they are able to extend this right to seek deficiency up to 20 years in some states. Why is this period so long compared to other financial statues of limitation? Bankruptcy falls off your credit report after 10 years and the IRS can't badger you past 10 years for tax liabilities, so why can/should the banks be able to go after you for twice as long as the government can? Hell, even child support ends when the kid's 18...
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Aug 8, 2011 19:21
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daggerdragon posted:Why is this period so long compared to other financial statues of limitation? Bankruptcy falls off your credit report after 10 years and the IRS can't badger you past 10 years for tax liabilities, so why can/should the banks be able to go after you for twice as long as the government can? Hell, even child support ends when the kid's 18... Lobbyists 
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Aug 8, 2011 19:27
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Thanks for explaining this. That's good to know.
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Aug 8, 2011 19:41
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The home mortgage forgiveness act of 2007 (or 2008?) allows people to more or less write off the 1099-C that comes back to you from the bank for cancellation of debt. It's kinda lovely because apparently someone canceling debt you wouldn't have gotten a deduction for (the principal) winds up counting as INCOME when you're already reeling from a short sale or foreclosure. So, if you bought a house within the past 6 years or so and you qualify under that act, it shouldn't be so bad. Also, if you rented your place out and are taking a loss (most likely) while you don't qualify, your deductions for capital losses due to the basis value of the property at time you bought it can result in evening things out just fine for you. Under no probable circumstances though can you realistically come out ahead though financially from any of these forms of loss. The closest thing I could think of would be to have bought a house in 2004 with NO money down, rented it out profitably somehow until now somehow (likely due to the depreciation deduction), and sell at a loss for another deduction. It just used to be that for a lot of people, until recent times foreclosure usually also meant a bankruptcy.
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Aug 8, 2011 20:34
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necrobobsledder posted:The home mortgage forgiveness act of 2007 (or 2008?) allows people to more or less write off the 1099-C that comes back to you from the bank for cancellation of debt. It's kinda lovely because apparently someone canceling debt you wouldn't have gotten a deduction for (the principal) winds up counting as INCOME when you're already reeling from a short sale or foreclosure. So, if you bought a house within the past 6 years or so and you qualify under that act, it shouldn't be so bad. Also, if you rented your place out and are taking a loss (most likely) while you don't qualify, your deductions for capital losses due to the basis value of the property at time you bought it can result in evening things out just fine for you. There are restrictions with this, to keep in mind. It must be your primary residence, and it expires in either 2011 or 2012. As I am renting out my severely under-water home and purchased a new one, I will not be able to claim such a tax credit in the event of a short-sale. Yet another reason I DO NOT want to do the short when the lease is up in 23 months... I'm scraping every penny to be able to do a normal sale when the time comes, and praying for some kind of market uplift. (hah!)
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Aug 8, 2011 20:42
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Uh, I did mention that you don't qualify if you're renting your place out though, although it seems a tad obscure now I read it back. It isn't a tax credit either, but a deduction to offset the 1099-C I bought at $320k in 2007, rented out throughout most of 2009 at about a $900 / mo loss (after tax deductions), and finally closed in August 2010 for a short sale of $175k after stopping my mortgage payment in March. I got my 1099-C for about $95k (my balance was $278k when I stopped paying, the PMI I had covered the rest I believe) and went from a credit score of 770-ish to 650. It's now passed 700 after paying every bill I've got like I did before all this. If it wasn't for me having to keep a drat good credit score during 2009 to pass some high-level security clearances, I absolutely would have stopped paying my mortgage instead of bothering with renting it out. With so many factors keeping my property's value permanently depressed, there's no way I could have ever recovered and every dollar I was putting in was truly sunk cost. I didn't qualify for poo poo on my 2010 taxes and I actually got a tax return despite me making a fair bit of money in 2010 on sale of some stock. My recommendation to anyone severely underwater that can't rent to cover the mortgage is to just default mostly because I doubt property values will recover in the time period a foreclosure goes off your record. If our inflation is that bad to get prices back into alignment with Case-Schiller indexes within the bankruptcy recovery time, you just might be trying to decide whether to buy a 24-pack of ramen from Costco-Mart or pay your mortgage.
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Aug 8, 2011 21:15
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Speaking of... how does PMI interact with the recourse thing? That is, if a bank forecloses, and then sells the property for less than the outstanding debt, surely they can either sue for the remainder (in a recourse state), or make a claim against the mortgage insurance, but not both, right? In which case, if you're still paying PMI, isn't that some degree of protection? Because why would a bank go to the trouble and expense of lawsuit when they can just make an insurance claim... Or am I missing something there?
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Aug 8, 2011 21:42
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necrobobsledder posted:Uh, I did mention that you don't qualify if you're renting your place out though, although it seems a tad obscure now I read it back. It isn't a tax credit either, but a deduction to offset the 1099-C My mistake, I read your message too fast!
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Aug 8, 2011 21:42
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Leperflesh posted:Speaking of... how does PMI interact with the recourse thing? That is, if a bank forecloses, and then sells the property for less than the outstanding debt, surely they can either sue for the remainder (in a recourse state), or make a claim against the mortgage insurance, but not both, right? In which case, if you're still paying PMI, isn't that some degree of protection? Because why would a bank go to the trouble and expense of lawsuit when they can just make an insurance claim... I don't know the specifics of the policy you are referring too, but normally if there is a recovery that was covered by an insurance claim, the recovery goes to the insurance company. It works the same where when insurance pays for a stolen car. If they find the car after you buy a new one, the insurance company gets the car and sells it.
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Aug 8, 2011 22:22
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Elephanthead posted:I don't know the specifics of the policy you are referring too, but normally if there is a recovery that was covered by an insurance claim, the recovery goes to the insurance company. It works the same where when insurance pays for a stolen car. If they find the car after you buy a new one, the insurance company gets the car and sells it. The PMI company can seek deficiency.
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Aug 8, 2011 22:40
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I bought a house in May 2008 on a 30 year loan with a 5.6% interest rate. I haven't refinanced and I'm not sure how much longer I will be in this house. I think it could be as short as 2 years, but assuming the value of the house has gone down, it might be a longer (I haven't checked because I am afraid, so I am assuming the worst). I just got a call from Wells Fargo which owns my mortgage and they said that I am eligable to get refinanced to 4.3% for a 20 year loan and my payment will go up by $44 a month (which I can afford) or refinance the 30 years and get $100 off my payment. I'd rather shorten the loan. I had thought about refinancing myself, but I was worried about the fees/closing cost if I only keep the house for 2 more years, plus I'm kinda lazy. Normally I ignore telemarketers, but they transferred me to someone actually from a local Wells Fargo branch which made me take it more seriously. They made it sound like I wouldn't have any costs and wouldn't need to have the house re-appraised because of some Federal Mortgage Relief something-or-other. Of course I would confirm this while going through the process, I was busy and couldn't hear the whole pitch. It sounds like a no brainer to have my interest rate reduced for "free" (I'm assuming the government is eating the cost of the refinancing as part of this mortgage relief?). They said they just need to run a credit check and confirm my employment. I can go to the local Wells Fargo branch tomorrow and set it up, I just wanted to know if there were any questions I should ask them or any research I should do before I go in? Thanks! BossTweed fucked around with this message at 23:13 on Aug 8, 2011 |
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Aug 8, 2011 23:11
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gvibes posted:If your income can support two mortgages, you could buy the other one, then walk away from the place in Cali. This would have worked 2-3 years ago, but banks are wise to this now and set their underwriting standards accordingly. Mine wanted to see 30% equity in the existing properties before they'd approve a loan on a new one.
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Aug 9, 2011 00:42
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SlapActionJackson posted:This would have worked 2-3 years ago, but banks are wise to this now and set their underwriting standards accordingly. Mine wanted to see 30% equity in the existing properties before they'd approve a loan on a new one. Without equity in the house we're currently living, there's not much chance of getting a loan for a second house, is there? Edit: if the second house requires a loan of about $190k, how much down would my wife and I have to have in order to have a realistic shot of getting a loan? Our credit scores are both excellent. Oxford Comma fucked around with this message at 01:29 on Aug 9, 2011 |
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Aug 9, 2011 01:10
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SlapActionJackson posted:This would have worked 2-3 years ago, but banks are wise to this now and set their underwriting standards accordingly. Mine wanted to see 30% equity in the existing properties before they'd approve a loan on a new one. There are more ways than that equity target. Conventional loans will require six months of payments for both properties in funds. Note that retirement accounts WILL apply (less an appropriate amount for taxes and penalties). FHA does not have these restrictions. As he would be walking away, and not shorting, it would be easier. Another thing to note, three years after a foreclosure you can be approved for an FHA loan at a prime rate. Can walk away and rent and avoid the hassle...
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Aug 9, 2011 03:11
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Oxford Comma posted:Without equity in the house we're currently living, there's not much chance of getting a loan for a second house, is there? Too many variables for us to answer. The answer is whatever would make the loan amount low enough for your debt to income ratio to come into spec. It's about 42 on a conventional and I want to say 55 on an FHA. call up a mortgage broker and pick their brain, that's what they're for. Just DON'T say you're planning to walk away. You are going to maintain payments on both. The old will become an investment property.
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Aug 9, 2011 03:13
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