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    stineaac's Avatar
    stineaac Posts: 11, Reputation: 1
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    #1

    Jul 7, 2008, 08:03 PM
    Can owner financing be done if a mortgage is out on the home already?
    We have a mortgage of 400k on our house worth 800k. We are considering doing owner financing to help us sell our house. Can we legally do that if we do not own 100% of the home due to our mortgage owning half? Are there loopholes where we can still do that? Thanks for any advice
    George_1950's Avatar
    George_1950 Posts: 3,099, Reputation: 236
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    #2

    Jul 7, 2008, 08:53 PM
    You have to come to a valuation of the property; a lender will have the home appraised and probably loan 80%, so you could 'take back' a second mortgage of the remaining 20%. Has the house been for sale with a broker?
    stineaac's Avatar
    stineaac Posts: 11, Reputation: 1
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    #3

    Jul 8, 2008, 05:16 AM
    George - I'm sorry but I don't understand what "valuation" means or why we would need to take out a second mortgage. Please explain. We would rather not refinance or take out another mortgage due to closing costs etc. Our house is on the market right now but we plan to withdraw the listing. We will then advertise it on our own, giving owner financing as an option. I don't even know if we can refinance since our house is on the market. I heard something like it has to be off the market for 6 months before we could refinance. Thanks for your advice
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #4

    Jul 8, 2008, 05:35 AM
    Unless you are going to pay off the existing mortgage, then you probably can't sell the home with owner financing. The bank is unlikely to let you transfer the property until their loan is paid. I would defintiely contact the mortgage lender and see what you can work out with them. Maybe an assignment of the mortgage with you financing the balance. I would be cautious here about making sure the buyer can afford to pay.

    An alternative you might consider is a contract for sale. In this way the property does not change hands until the contract is fulfilled. In the meantime they make payments which you use to pay the mortgage. If they default, you just repossess the property and find a new buyer.
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