topic Re: Is this a realistic option? in Mortgage Loans

Is this a realistic option?

maryellis1981 — Wed, 23 May 2012 02:13:28 GMT

Hi Everyone,

I have posted a couple of times before but here is a quick background. I sold my previous home through a short sale due to my divorce in 2010. I have since then let my credit score recover and I am currently at 710-712 according TU, EXP and EQ. The LO at my local bank has indicated that I should be eligible for a new mortgage 2 years after my short sale, Novemeber 2012 so long as I have a 10% down-payment.

So here's my current situation... I might have found the perfect house. I have an appointment this weekend to go take a look at it. It has everything I'm looking for and the price is right. My mother has mentioned possibly purchasing the house herself and then have me assume the mortgage after November when I can get approved. Is this a realistic option? Has anyone assumed a mortgage before? Is it a tough to a bank to approve such a situation?

Thanks in advance for the advice!

Re: Is this a realistic option?

Booner72 — Wed, 23 May 2012 22:26:03 GMT

I wouldn't even tell the bank that is the plan. I'd just have my mom get the loan, and then qualify and assume in November...

Re: Is this a realistic option?

Walt_K — Thu, 24 May 2012 14:11:40 GMT

I don't think all loans are assumable, so make sure you look at a loan program that allows for assumption.

Re: Is this a realistic option?

maryellis1981 — Thu, 24 May 2012 19:17:11 GMT

Great! So if my mother is going to her local bank for the mortgage should she ask the LO if the loan is assumable at that point? Is it common for loans to not be assumable? Or are most loans assumable? I have no doubt that she wouldn't be able to qualify. Between her and my father their retirement income is well over six figures, their credit scores are fantastic and their own home is paid for.

Not sure if it matters or not but I would be looking to assume the mortgage by the end of the year.

Re: Is this a realistic option?

K_J — Thu, 24 May 2012 21:27:08 GMT

If your short sale was in 2010, I would think you couldn't buy till 2013, someone correct me if I am wrong.

Re: Is this a realistic option?

maryellis1981 — Fri, 25 May 2012 01:41:40 GMT

The LO at my bank and another LO a mortgage company through a local credit union both told me I would be qualified for a conventional mortgage with 10% down-payment. My short sale only had a 60 day late and my credit scores are already in the low 700's.

Re: Is this a realistic option?

maryellis1981 — Fri, 25 May 2012 01:42:42 GMT

Other than the lates prior to my short sale is flawless.

Re: Is this a realistic option?

Walt_K — Fri, 25 May 2012 13:24:55 GMT

maryellis1981 wrote:
Great! So if my mother is going to her local bank for the mortgage should she ask the LO if the loan is assumable at that point? Is it common for loans to not be assumable? Or are most loans assumable? I have no doubt that she wouldn't be able to qualify. Between her and my father their retirement income is well over six figures, their credit scores are fantastic and their own home is paid for.

Not sure if it matters or not but I would be looking to assume the mortgage by the end of the year.

My (limited) understanding is that most conventional loans are not assumable. FHA loans are assumable. I don't know about other loan programs.

I don't think it would be odd for your mother to ask the LO. Having a mortgage that is assumable can be a selling point, so it would be natural for her to want to know whether that is an option for when she wants to sell the house.

Re: Is this a realistic option?

maryellis1981 — Sat, 26 May 2012 02:18:06 GMT

So the home I was interested in went under contract today. Boo! But my mother and I are scheduling an appointment next with the local bank to see what the options are (if any). Thank you everyone the responses!

Re: Is this a realistic option?

onceuponan803 — Sun, 27 May 2012 02:21:06 GMT

I have just encountered a short sale situation where the seller (borrower) had NO late payments, did the short sale, and qualifed for a new home loan almost immediately.

That said, almost no loans are assumable these days. You could, however, pay your mom directly. She could add you to the home's title. You could also do a 'wrap" or "all inclusive trust deed" and leave the loan in place (again, you pay your mom and she pays the bank mortgage).

Re: Is this a realistic option?

maryellis1981 — Sun, 27 May 2012 14:12:51 GMT

Thank you for the response! Unfortunately I do have a 60 day late on my credit report, I was advised at that time to be late in order for the bank to approve the short sale. I was able to pay the mortgage at that time but I knew once winter hit I would not be able to pay the mortgage and heat the home (New Egland winters) so that is why I went through the short sale- to prevent an impending forclosure.

I know my folks only made the offer to buy the home but for me to buy it back from them by the end of the year, that's why we were going to the assumable route. They have no desire to just add me to the title, this is really just supposed to be a short term solution. Homes in my area are moving quickly and my lease expires in September and I wouldn't qualify for a mortgage until the November/December time frame. The bank we have an appointment with this coming week is a local bank whom my parents have done a lot of business with for almost 30 years. I am hoping because of this long term relationship they will have some options for us.

Re: Is this a realistic option?

lolabelle — Sun, 27 May 2012 16:25:33 GMT

Your parents may want to consult with a tax advisor, as there could very well be gift tax consequences for them, depending upon how this transaction is structured.