Posted on: 15th Jan, 2010 09:26 pm
My friend is terminally ill. She has asked me if I want to purchase her house. I would like to purchase her house, but I do not know if it is possible. Currently, it has a reverse mortgage. She owes approximately 200K and the property is presently worth about 315K. Does the reverse mortgage preclude the sale of the property to myself (non-family member)? If so, can she include me in her will or estate to allow for the sale? Do I need to purchase it before her departure or can I wait until after? Any info you could provide would be greatly appreciated.
Hi litlinks,
The reverse mortgage on the property does not eliminate the possibility of the sale of the house. You do not have to wait till your friend's departure to purchase the home. The reverse mortgage must have to be paid off, if the owner of the home vacates the property or if he/she sells it off. Thus, your friend can sell it to you, provided she pays off the reverse mortgage in full. If the property is currently worth $315k and the reverse mortgage balance is $200k, she can sell it to you and pay off the mortgage.
The reverse mortgage on the property does not eliminate the possibility of the sale of the house. You do not have to wait till your friend's departure to purchase the home. The reverse mortgage must have to be paid off, if the owner of the home vacates the property or if he/she sells it off. Thus, your friend can sell it to you, provided she pays off the reverse mortgage in full. If the property is currently worth $315k and the reverse mortgage balance is $200k, she can sell it to you and pay off the mortgage.
I am very sorry about your friend.
In this situation, a good thing to do would be to contact a realtor that specializes in short sale.
The realtor would work on the behalf of your friend to negociate a fair settlement with the lender. If the home is upside down on the value, the realtor would work out a settlement with the lender where they would take less than what is owed.
This would affect your friends credit, but since she is terminally ill, I am not sure how much of a concern that is. In this situation, the bank would more than likely agree to short sale since she already has a buyer for the property, and they wouldn't have to go into the process of foreclosure.
You would still need to pay closing costs associated with the loan. FHA is a good way to put down less. only 3.5%. This can be in the form of a gift if need be, or if you have your own funds.
This is a better option than just taking your chances when your friend passes, that you will get the bid on the property. And it's better than your friends estate having to owe any portion of the negative balance back to the bank.
I feel for the situation your friend is in. If there is any help I can provide at all, please email me. I would be glad to give you the best available advice. I have a network of people that I can contact if I don't have the answers to your questions right away.
I would like to ensure that the two of you are taken care of properly.
In this situation, a good thing to do would be to contact a realtor that specializes in short sale.
The realtor would work on the behalf of your friend to negociate a fair settlement with the lender. If the home is upside down on the value, the realtor would work out a settlement with the lender where they would take less than what is owed.
This would affect your friends credit, but since she is terminally ill, I am not sure how much of a concern that is. In this situation, the bank would more than likely agree to short sale since she already has a buyer for the property, and they wouldn't have to go into the process of foreclosure.
You would still need to pay closing costs associated with the loan. FHA is a good way to put down less. only 3.5%. This can be in the form of a gift if need be, or if you have your own funds.
This is a better option than just taking your chances when your friend passes, that you will get the bid on the property. And it's better than your friends estate having to owe any portion of the negative balance back to the bank.
I feel for the situation your friend is in. If there is any help I can provide at all, please email me. I would be glad to give you the best available advice. I have a network of people that I can contact if I don't have the answers to your questions right away.
I would like to ensure that the two of you are taken care of properly.
I would also like to mention that once the short sale is over, it's over. The bank could not come after any other assets your friend might have to recoup the loss.
>>but I do not know if it is possible
A Reverse Mortgage is just like any other Mortgage and doesn't restrict you from doing anything you'd be able to do with a traditional Foward Mortgage.
>>Does the reverse mortgage preclude the sale of the property to myself (non-family member)?
No
She'd be selling her house to you as a FSBO (for sale by owner). You'd pay her the agreed amount of money, pay off the Reverse Mortgage Lender, and own the house.
A Reverse Mortgage is just like any other Mortgage and doesn't restrict you from doing anything you'd be able to do with a traditional Foward Mortgage.
>>Does the reverse mortgage preclude the sale of the property to myself (non-family member)?
No
She'd be selling her house to you as a FSBO (for sale by owner). You'd pay her the agreed amount of money, pay off the Reverse Mortgage Lender, and own the house.
I apologize...I was quick to answer, and didn't see that your friend is not upside down on the value of the home.
I guess that was an important detail.
Your friend can sell you the home. She can do a for sale by ownder and a titl company can help you write a contract up so that no realtors are involved.
This way your friend won't have to pay out a commission.
It would be a relatively simple purchase.
I guess that was an important detail.
Your friend can sell you the home. She can do a for sale by ownder and a titl company can help you write a contract up so that no realtors are involved.
This way your friend won't have to pay out a commission.
It would be a relatively simple purchase.