Question by me: Real estate question-Our landlord made this proposal…should we do it??
We’ve been in some difficult times.We’re drowning and don’t want to have it spill on you.
Simply we’d like you to take over the mortgage for purchase. We’d make nothing.We’d save our credit. You’d get a heck of a buy. You don’t have to try and qualify for a loan.WinWin! The loan is not assumable but we could document a sale between ourselves. I’m a real estate investor by trade and have the documents. You can bring them to your attorney for review, of course. You could then pay the mortgage comp. directly to ensure you know the mortgage is getting paid.The primary mortgage is $ 1042.99 a month. It’s on my credit that used to be good. A 30yr @ 6.5% fixed PITI built in. Total loan = $ 142,938.60. We pulled a LOC $ 27,000 leaving well over 80% LTV still in property. It’s variable @ prime + 3 (ouch). It’s monthly due is currently about $ 250 – interest expense.5/2007 it appraised for $ 235,000. I know the market is hurting and it would be less now. I also know it’s just a matter of waiting for values to increase. The cost to you would be just $ 169,938.60. Since you’d be helping us as much as we’re helping you, we are not asking for any money down. Just pay the mortgage and LOC. We would simply put a change of address in with CountryWide and you’d get the bills and track your payments. If interested, happy to fax original loan docs and templates of our agreement any time. if you two think you can qualify, you can just buy the house.The price$ 170,000 buyer pays all assoc. fees.

Best answer:

Answer by Dizzy_Lizzy
So what I see is that your landlord wants you to pay his mortgage. So he’s still getting credit for those payments, and you’re keeping your house.

Who would legally own the house?
What happens if someone wants to sell this house in a few years – who has the right to sell it?
What guarantee does this agreement lay out that the landlord can’t reclaim his house later?
Is that line of credit still open? (If it is, no flipping way is this a good idea. As you pay in, this guy could keep taking money from the line of credit since the stupid loan is in his name. Basically, he’d still have access to the credit line, but you’d be paying his bills!)

I’d consider it only after hiring my own attorney, but I probably wouldn’t do it because of that line of credit issue.

Give your answer to this question below!

Question by shesthat1: What is the effective cost of combined loans?
PLEASE HELP! I’ve been trying to figure out this problem for 45 minutes now.

Bud is offering a house for sale for $ 180,000 with an assumable loan which was made 5 years ago for $ 140,000..? Bud is offering a house for sale for $ 180,000 with an assumable loan which was made 5 years ago for $ 140,000 at 8.75% over 30 years. Kelsey is interested in buying the property and can make a $ 20,000 down payment. A second mortgage can be obtained for the balance at 12.5% for 25 years. What is the effective cost of the combined loans, if Kelsey would like to compare this financing alternative to obtaining a first mortgage for the full amount?

The answer is supposed to 9.39%.
Do I need to calculate FV balance after 5 years?
Is my second mortgage loan $ 20,000?
I’m also not sure if my PMT is correct, I get $ 1,101.38.
I’m a little confused with your explanation… okay so what I did already was…
PV= -140,000
i=8.75%/12
n=30*12
Compute PMT = 1101.38..
but you are saying do n= 25*12 instead, so I would get PMT = 1151.00

When I do the 2nd mortgage, I get…
i=12.5%/12
n=25*12
PV=-20,000 ??
PMT?=218.07

I added the two payments, (either one i choose doesnt give me the right answer)
n=25*12
PV=???-140,000 IDK
FV=0
i?? I keep getting like 10.5% or 7.9%
PMTs are default monthly pmts if not otherwise noted to my knowledge.
Cool, thanks!
If I calculate remaining loan balance after 5 years, I get FV=133,964.
What do I do with that? Do I subtract 140,000-133,964 ??? And get 6036? Is that my new 2nd mortgage PV???
Do you at least understand the question? Bud is offering a house for sale for $ 180,000 with an assumable loan which was made 5 years ago for $ 140,000 at 8.75% over 30 years. Kelsey is interested in buying the property and can make a $ 20,000 down payment. A second mortgage can be obtained for the balance at 12.5% for 25 years. What is the effective cost of the combined loans, if Kelsey would like to compare this financing alternative to obtaining a first mortgage for the full amount?

Maybe if it was written differently I could understand what was going on in the problem.
I guess ill check back every 15 minutes or so just to see if you came up with anything, thanks.
AHHHHHH I’m still not getting the right answer… okay so what I have so far that I think is right??
PV= -140,000
i=8.75%/12
n=30*12
PMT = 1101.38
n=5*12
FV=133,964 <--remain bal after 5 years

2nd Mortgage
PV=-26036 from (153,964-133,964)
i=12.5%/12
n=25*12
PMT=?283.88

Now add pmts.. (1101.38+283.88)
PMT=1385.26
n=25*12
PV=?????????? 153,964
FV=0
i???9.87%

Closer but answer is supposed to be 9.39% .. Would you happen to know where I could have screwed up in my calculation?

Are you sure its right? I don't know what any of that math work is. But I'm pretty sure the answer has to be really close cuz when I calculated the other homework problems they were all close to the real answer. Oh no.. what am I gonna do Poopers
Let me know if you are feeling kind and if I could private message you about this problems and others. If not, its fine too.
I just messaged you on yahoo !!!!!!!!!!
Please get on yahoo, great we can do this other example problem in the book im having trouble with.. yay homework!

Best answer:

Answer by Jono N
Your second loan isn’t 20k. its the difference between the remaining mortgage (after 5 years) plus your 20K deposit, and the 180K cost of the house.

So 133,964 + 20,000 =153,964.

Then 180,000 – 153,964 = 26,036 <== try that as the second loan amount
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Think of it this way-the cost is 180k and you already have 20k saved up. The rest of the money (160k) will come from loans. The old loan is worth $ 133,964 today, so you just need to borrow another $ 26,036.
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sorry for the delay, i calculate manually. well i almost got the correct answer but i did it a little differently.

I did a value-weighted cost of capital (thats just fancy talk).

Mortgage 1 = 133964 = 83.73% x Interest rate = .0875% = 7.33%
Mortgage 2 = 26036 = 16.27% x Interest rate = .12.5% = 2.034%
Total loans = 160k. = 100% Effective Interest rate = 9.36%

I'm not sure what's going on with you calculator, but at least the process is right.
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Well i'm only 3 hundredths off the correct answer (9.36), it can't just be a coincidence. I realised that I can't do this question without a graphics calculator since you're finding the interest rate. That's the only thing I can't do with manual calculations.
You could try using n*25 like we did at the start o get the payments of $ 1151 instead of 1101.38. Plus the other payment of 283.88 gives you $ 1434.8. Try that. Fingers crossed.

Sure email or IM me, I cant' promise anything though.

What do you think? Answer below!