Creative Home Buying
Creative Home Buying – Get a Home Without Changing the Existing Mortgage
By Buyincomeproperty.com
Nov 21, 2005, 09:52

There’s no way someone would sell you a house without insisting that you pay off their mortgage and get a loan in your own name, right? Actually, this is only one of the many creative home buying options available and it’s probably more common than you think. Take a look at some of the reasons this creative home buying option is a good idea, and some of the reasons this may not be the creative home buying option you would ever consider.

Consider this type of creative home buying opportunity. Pretend for a moment that you are an extremely motivated seller. You’ve fallen behind on your mortgage payments and a divorce (or illness or unemployment or any number of issues) has dragged on far too long. You’re motivated to sell but the market is simply lagging at the moment because interest rates on home loans are through the roof. You need a creative home buying option. Enter a willing buyer who is skeptical only because the interest rates are going to lengthen the term of the loan farther than he was hoping to go. This is a perfect creative home buying opportunity for both buyer and seller.

By leaving the existing mortgage in place, both buyer and seller are benefiting from this creative home buying opportunity. The buyer can wait until mortgage rates are lower to eliminate the creative home buying terms and enter into a traditional mortgage. By paying on the loan for a few years, he may even be in a position to take out some extra money to do some improvements at that time. The seller can stop worrying about the monthly payments and he’ll get a reasonable selling price. Especially if the seller has already had trouble making payments on time, the fact that payments will now be made on time in this creative home buying situation will help rebuild his credit.

Remember that this type of creative home buying does carry some negative points and some risks. The seller trusts the buyer to both care for the house and to make payments. Even if there’s a contract, the seller is still technically responsible for the mortgage payments and may have to make payments. The buyer isn’t getting credit for making these creative home buying payments on time and may not be motivated to do so. The seller in this creative home buying opportunity may very well make every payment on time – but he won’t get credit for those timely payments on his credit report.

A contract is vital before entering into this type of creative home buying opportunity – whether buyer and seller know each other or not. Both buyer and seller should take time to be sure they fully understand the contract, including who becomes responsible for any late payments.

You may think this type of creative home buying isn’t legal, but the truth is that your lender isn’t likely to interfere with the situation at all as along as payments are made on time. After all, remember that the bank is in the business of loaning money – not handling real estate. Even a creative home buying situation isn’t typically a problem as long as the loan is being repaid according to the terms.