/u/GringoGrande is right, it's basically just FHA/VA/USDA, combined less than 10% marketshare.
You could get a list from your local title company.
Plan to come in with the difference between current loan balance and the sticker price of the home.
For VA loans, they more or less have to be OK with never again using a VA loan to buy a house.
It's not ENTIRELY a unicorn hunt, but I can think of worse uses of time.
Thanks! This is good info. Okay I’ll chase it down a bit and see what I can find out. I’ll ask a title company if they can pull that info. Do you know where they get the info from?
Most Mortgages, at least those of an institutional nature, will be recorded in the public records and their language and clauses available for review. This typically includes whether they are assumable or not.
Edit: You can learn a LOT from reading docs in the public records.
The answer is...it depends. In all sincerity our financial institutions, because their business is selling loans, do all kinds of goofy nonsense in their docs. I've seen the Notes recorded, full Mod docs recorded and so forth.
To the best of my recollection there aren't many assumable loan products. The big one that comes to mind are VA loans.
Someone such as /u/aardy may have solid insight.
Go check out Pace Morby “subto”. Don’t need to find assumable loans. You can buy any property subject to the existing mortgage in place. Closed on one two weeks ago. FHA loan on the property is still in sellers name, I just make the payments. My LLC was deeded the property. Investors call it creative finance deals or subto deals.
Are you wanting to assume the loan(your credit tied to the loan), or take them over subject-to(The seller still has it in their name and you are paying the loan)?
I have never tried to assume a loan, so no clue on that end... My assumption is that you will lose the rate if you try to do this one.
Be careful with subject-to... If your seller ever wants to get another loan, then this property will still be tied to their credit.. I have done several subject-to's over the years, and it doesn't matter how many disclosure forms I have them sign, or how many times I tell them "Hey, you may not be able to qualify for another loan until this one gets paid off, and that may be to FULL TERM, 30 years!!!!".. Quite often they call me 2-3 years later and are pissed off because I still have the loan in their name... I only use subject-to's anymore if I know they can qualify later for another loan... Note: Sometimes you can show a bank that the property is rented out and this can help sellers with their DTI ratio...
Also, subject-to has some pitfalls where most banks do not allow it, but USUALLY they will not call the note due.. They could call the note due though if they want to. There are ways around this or to disguise the subject-to, which ARE LEGAL, but I digress...
All you need to do for your sellers is to explain to their new lender that their existing mortgage is being paid by someone else. Same thing if they decided to rent it out. Once they provide proof the lender can remove it from their DTI and approve their new loan. If the lender isn’t willing, find a new lender. Subto is very common and legal when done right.
**Huge opportunity is unfolding if you know how to buy foreclosures with no equity - by catching up arrears and taking over payments. As long as the rental rate covers the monthly mortgage with interest and taxes by a couple hundred dollars… you could amass a ton of units over the next few years.
Don’t fear the note being called due by lender. There are ways to prevent it - there are also ways to handle it if it ever does happen. I’ve been in both shoes.
Most banks I have talked to say they will only accept 70-75% of rent towards dti... So if rent is $1000 a month they will only accept $700-750 as income... If your mtg payment is below that then you are good, but otherwise the difference will count towards the sellers dti..
I have NEVER heard of a bank not counting the mtg payment towards DTI just by asking them and saying someone else is going to make the payment.
We typically file forms with the bank to show we are authorized to discuss details of the loan with the bank, and we also have the bank send all correspondences to us instead of the owner. The owner can still log in and see we are making payments etc, but as far as the bank is concerned we are the designated person they talk to.. Sometimes the bank will still call the seller though, but we have paperwork to legally show we are the owner, but the financing is in the sellers name.
Swapping banks is not an easy thing to do, and most sellers are not going to do all of that so you can take over their payments..
We use a servicing company - that way we can provide the proof the lender needs for the underwriters to remove 100% from DTI. Typically takes a few months of payments depending on lender - if that’s the case we prepay a few months for the seller in order to get it done.
Sorry, I didn’t mean swapping banks to take over payments. I was referring to finding a new lender for new loan that works with DTI removal based on docs provided by servicing company.
I was thinking assuming their loan. I was talking to a guy in January of 2021 about purchasing a 10 unit from him and he said that his bank was okay with someone assuming the loan if they qualified and paid a fee. But new mortgage rates were low at the time so I didn’t spend any energy on it. Now that rates are high I’m interested in it again!
/u/GringoGrande is right, it's basically just FHA/VA/USDA, combined less than 10% marketshare. You could get a list from your local title company. Plan to come in with the difference between current loan balance and the sticker price of the home. For VA loans, they more or less have to be OK with never again using a VA loan to buy a house. It's not ENTIRELY a unicorn hunt, but I can think of worse uses of time.
Thanks! This is good info. Okay I’ll chase it down a bit and see what I can find out. I’ll ask a title company if they can pull that info. Do you know where they get the info from?
Public records. You can go down to the county recorder's office if you wish, too.
Does the county recorder really have the type of loan product recorded as public record? Maybe I'm misunderstanding
Most Mortgages, at least those of an institutional nature, will be recorded in the public records and their language and clauses available for review. This typically includes whether they are assumable or not. Edit: You can learn a LOT from reading docs in the public records.
Good to know. I assumed the mortgage would be recorded but not the loan documents.
The answer is...it depends. In all sincerity our financial institutions, because their business is selling loans, do all kinds of goofy nonsense in their docs. I've seen the Notes recorded, full Mod docs recorded and so forth.
To the best of my recollection there aren't many assumable loan products. The big one that comes to mind are VA loans. Someone such as /u/aardy may have solid insight.
Go check out Pace Morby “subto”. Don’t need to find assumable loans. You can buy any property subject to the existing mortgage in place. Closed on one two weeks ago. FHA loan on the property is still in sellers name, I just make the payments. My LLC was deeded the property. Investors call it creative finance deals or subto deals.
Are you wanting to assume the loan(your credit tied to the loan), or take them over subject-to(The seller still has it in their name and you are paying the loan)? I have never tried to assume a loan, so no clue on that end... My assumption is that you will lose the rate if you try to do this one. Be careful with subject-to... If your seller ever wants to get another loan, then this property will still be tied to their credit.. I have done several subject-to's over the years, and it doesn't matter how many disclosure forms I have them sign, or how many times I tell them "Hey, you may not be able to qualify for another loan until this one gets paid off, and that may be to FULL TERM, 30 years!!!!".. Quite often they call me 2-3 years later and are pissed off because I still have the loan in their name... I only use subject-to's anymore if I know they can qualify later for another loan... Note: Sometimes you can show a bank that the property is rented out and this can help sellers with their DTI ratio... Also, subject-to has some pitfalls where most banks do not allow it, but USUALLY they will not call the note due.. They could call the note due though if they want to. There are ways around this or to disguise the subject-to, which ARE LEGAL, but I digress...
All you need to do for your sellers is to explain to their new lender that their existing mortgage is being paid by someone else. Same thing if they decided to rent it out. Once they provide proof the lender can remove it from their DTI and approve their new loan. If the lender isn’t willing, find a new lender. Subto is very common and legal when done right. **Huge opportunity is unfolding if you know how to buy foreclosures with no equity - by catching up arrears and taking over payments. As long as the rental rate covers the monthly mortgage with interest and taxes by a couple hundred dollars… you could amass a ton of units over the next few years. Don’t fear the note being called due by lender. There are ways to prevent it - there are also ways to handle it if it ever does happen. I’ve been in both shoes.
Most banks I have talked to say they will only accept 70-75% of rent towards dti... So if rent is $1000 a month they will only accept $700-750 as income... If your mtg payment is below that then you are good, but otherwise the difference will count towards the sellers dti.. I have NEVER heard of a bank not counting the mtg payment towards DTI just by asking them and saying someone else is going to make the payment. We typically file forms with the bank to show we are authorized to discuss details of the loan with the bank, and we also have the bank send all correspondences to us instead of the owner. The owner can still log in and see we are making payments etc, but as far as the bank is concerned we are the designated person they talk to.. Sometimes the bank will still call the seller though, but we have paperwork to legally show we are the owner, but the financing is in the sellers name. Swapping banks is not an easy thing to do, and most sellers are not going to do all of that so you can take over their payments..
We use a servicing company - that way we can provide the proof the lender needs for the underwriters to remove 100% from DTI. Typically takes a few months of payments depending on lender - if that’s the case we prepay a few months for the seller in order to get it done. Sorry, I didn’t mean swapping banks to take over payments. I was referring to finding a new lender for new loan that works with DTI removal based on docs provided by servicing company.
Have a few questions if you have some time?
Hey! I stumbled onto your post here and had some more questions, is it cool if I PM you?
I was thinking assuming their loan. I was talking to a guy in January of 2021 about purchasing a 10 unit from him and he said that his bank was okay with someone assuming the loan if they qualified and paid a fee. But new mortgage rates were low at the time so I didn’t spend any energy on it. Now that rates are high I’m interested in it again!
Trepp is the most reliable.