Assumable mortgages, foreclosures... - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

metallicat · 03-27-2007, 05:48 PM

The story goes I wanted to buy a house last year when prices here in Edmonton were relatively affordable, but I didn't. Now the market has gotten out of control, and buying a house has become next to impossible.

A few people have mentioned to me the possibility of assuming a mortgage, or a foreclosure of some sort? Does anyone have any information on that? Can you get into houses that have been half-way paid off for example?

Just anything general would be appreciated.

Sample00 · 03-27-2007, 05:51 PM

in order for you to assume a mortgage which in alberta is the only provicne you can do that. you have to give the sellor the difference between the purchase price and the mortgage.
so for example: if the house is being sold for $100,000 and the mortgage is 60,000, you give the sellor 40,000 and assume the mortgage.

Sample00 · 03-27-2007, 05:54 PM

I dont suspect there are any great foreclosure bargains out there right now.
most banks when they do a foreclosure will sell the house at market value.
in this economy, market value could be quite expensive. you would still have to qualify for a mortgage in case you wanted to purchase the house from the lender.

Nabber · 03-27-2007, 06:14 PM

Foreclosure as Sample mentioned are VERY hard to find as who wouldn't buy a house with a lot of equity in it with the market in Alberta being so hot. The bank in the past used to just pass them off but now a days are selling them at market value. Call a foreclosure lawyer (not the correct term) and ask them if they have any leads on pre-forclousure properties as you never know.

Assumable mortgages are rarely a good choice as you usually have to pay more for a home as the reason people are assuming is they can't get approved for a normal home loan, as well the only reason sellers are letting you assume is they are trying to get more than market value.

Your best bet is to get some knowledge on prices and review welist.com or comfree.com or other routes for homes that are being sold by owner that are underpriced as if you look hard you may beable to find a good deal.

photon · 03-27-2007, 06:26 PM

Yeah since there are so many people looking for forclosures, they tend to go to the people they know will buy them; I know a few people who are big into forclosures but they can buy many houses and do it fast, and they spent a lot of time getting in with the right people.

Assumables can be tough in this kind of market as well; as Sample said you have to have the cash to mortgage money.. and since values have been rocketing up but everyone's mortgage is the same, last year's $180,000 property with a $162,000 mortgage ($18,000 cash to mortgage) is now $280,000 with a $118,000 cash to mortgage, meaning you need $118,000 in cash to assume.

There are still some options though. Some people will do a "rent to own" or similar type situation, where they operate as a bank for you, give you a mortgage but provide the down payment for you in exchange for partial ownership. You make all the payments, and after five years the property gets refinanced, the other people get their money back plus a profit (say 50% of the increase in value over that 5 years, you get the other 50%), and you now own the property outright. There's a few different ways to structure it depending on what the needs are.

Of course you don't get the full benifit of owning the property 100% yourself for however many years, but it's far better than not owning at all.

troutman · 03-27-2007, 07:03 PM

It is much more difficult to assume mortgages in Alberta now. Many banks won't allow it.

http://www.calgarymike.com/mortgageassumptions.html

ken0042 · 03-27-2007, 07:30 PM

Keep in mind the main reason to assume a mortgage; it is to get yourself into a mortgage that you may not qualify for otherwise. You don't get a "deal" in general when assuming.

One thing I found when I bought my house (assumed mortgage); is that my first realtor told me that an assumable was near to impossible, and to hold onto my deposit until I would qualify on my own. (Had I done that I would have lost the $150K I've made in equity in my current house.) I found the realtor who sold me my house by an ad in the Sun; he advertized that he specialized in assumables.

I do think an assumable will be harder to find now. You will have to find somebody who bought 2 months ago and now suddenly cannot afford the mortgage. My house that I've been in for 2 years now; you'd need $200K to assume my mortgage.

Then add the info that Troutman gave, and it might be a tough proposition.

STAMPEDRED · 03-30-2007, 06:57 PM

Does anyone know how these things work?

I am looking to have someone, that I know, assume my mortgage. I really don't know the process involved in doing this and where a person begins with it. I am wondering if you justy go to the bank and let them know so and so is assuming the mortgage... to how much a lawyer would need to be involved and what it might cost.

Is there anyone here who has done this before?

jam26 · 03-30-2007, 07:41 PM

I had someone assume my mortgage about 5 years ago. It was a simple process. We went to a lawyer (used the same lawyer and split the cost), the assumer paid me out for what I had put into the house and then the deal was done a day or two later. Never had to deal with the mortgage company at all - the lawyer took care of that. I would suggest talking to a real estate lawyer.

You want to ensure you trust the person who is assuming your mortgage, however. You can be on the hook if he or she defaults on it.

STAMPEDRED · 03-30-2007, 07:55 PM

Its really that easy?

Do you remember roughly what it cost in the end?

ken0042 · 03-30-2007, 08:02 PM

I merged your thread with the one from 3 days ago.

jam26 · 03-30-2007, 08:49 PM

Quote:

Originally Posted by STAMPEDRED

Its really that easy?

Do you remember roughly what it cost in the end?

I don't remember how much, but it wasn't very much at all. The guy who was assuming it had connections in the real estate industry and we got a good deal from the lawyer. Wasn't more than a few hundred each. It was a piece of cake, but definitely seek the advice of a real estate lawyer and ensure you're dealing with someone you can trust. My situation was a bit unique since I knew the person who was assuming it fairly well and he worked in the real estate business. All I had to do was sign a few papers.

photon · 03-30-2007, 08:59 PM

As was mentioned, not all banks now allow mortgages to be assumed, so make sure you check with your bank to see if they'll allow it, or if they want the other person to qualify first.