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iggy407

Newbie Questions on CA

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1. If you do a CA with the homeowner and the owner intends to buy another property would it cause problems with the bank since he already has title to one property already?

2. Would that trigger the "due on sale" clause and could the home-owner use the new property as a permenant residence?

3. Since the homeowner still has to pay property-taxes how do ya'll go about it if the property taxes are paid on a monthly basis?

4. The last questions, is there a method or a way to have the tenant-buyer pay the mortgage themselves directly?

 

Thanks for your help.

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1) typically the lender will accept 70% of the lease payment the owner is receiving to calculate into the DTI, so they can normally qualify for the next house unless their DTI is too tight. so if their payments are $1k and they are leasing the house for $1k the owner will accept 70%, which in this case would add $300 on their debt side.

2) The owner can buy another house as their permanent residence, depending on their own credit and DTI. They would lose the homestead exemption from the first house. The due-on-sale would really only be triggered if the rates went up quite a bit, AND IMHO a lease option would never trigger it anyway since there is no change of title or insurance, but that's just MHO.

3) The monthly payment the owner is receiving should ideally cover PITI.

4) The owner can give them the mortgage info and the buyer can just make the payments if that's what everyone wanted. The mtg. company would almost always accept the payment, no matter whose name is on the check.

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Just to add to what John replied regarding question 4:

many homeowners won't be comfortable leaving the mortgage payment up to the t/b. A happy middle ground would be to use a third party escrow or title company to assure that the money is paid as instructed.

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Also, if they homeowner has an FHA loan on the property they would need to either buy their next house conventionally, with seller financing, or cash if they were looking to buy again. FHA has standards that prevent those currently with an FHA loan from buying using another FHA loan unless the family grows to a size too large for the house, the seller is relocating, or the seller is a non occupying co borrower under certain conditions.

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oh ok so that basically only applies if they have an fha loan on their first home and would that first home be categorized as an investment home for the homeowner since they're no longer living in it?

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FHA does allow a home to be an investment however it must be owner occupied at inception of the loan. They can't by another home using FHA while they have another FHA loan still open unless under the above circumstances.

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