Financing Equity from Assumable Mortgage

[Brady Hauch]

Hey all,

I'm looking into assuming the mortgage on my sisters house and am struggling to figure out how to finance the equity that I would have to come up with to make the deal work. Some details on the deal below:

Mortgage rate on the property: 3%

Monthly mortgage payment: $1200

Amount owed on mortgage: $230K

Current property value: $370K

Equity: $140K

Due to the low mortgage payment and high rent potential in this neighborhood I would like to assume this loan and rent this property out as a long term rental. I am trying to see if the numbers still make sense to do so after financing the equity portion that I would owe my sister.

Any thoughts on how I can finance the $140K in equity I would owe my sister? I tried speaking with several lenders and they were unable to help me with the deal. Any advice/ suggestions would be much appreciated!

Thanks,

Brady

[KC Pake]

Quote from @Brady Hauch:

Hey all,

I'm looking into assuming the mortgage on my sisters house and am struggling to figure out how to finance the equity that I would have to come up with to make the deal work. Some details on the deal below:

Mortgage rate on the property: 3%

Monthly mortgage payment: $1200

Amount owed on mortgage: $230K

Current property value: $370K

Equity: $140K

Due to the low mortgage payment and high rent potential in this neighborhood I would like to assume this loan and rent this property out as a long term rental. I am trying to see if the numbers still make sense to do so after financing the equity portion that I would owe my sister.

Any thoughts on how I can finance the $140K in equity I would owe my sister? I tried speaking with several lenders and they were unable to help me with the deal. Any advice/ suggestions would be much appreciated!

Thanks,

Brady

Hi Brady,

It sounds like a great opportunity to assume your sister's mortgage given the favorable rate and the rental potential. Here are a few options you might consider:

Home Equity Loan or HELOC: If you own another property with sufficient equity, you might be able to take out a home equity loan or a home equity line of credit (HELOC) to cover the $140K. These loans typically have lower interest rates than personal loans.

Personal Loan: While this may come with higher interest rates, it’s an option if you don't have other assets to leverage. Check with various lenders to compare rates and terms.

Private Lender: Sometimes private lenders or hard money lenders can be more flexible with their terms. They often look at the property value and potential rather than just your credit score and income.

Seller Financing: You might be able to work out a deal with your sister where she finances the $140K equity portion. You could pay her back over time with interest, similar to a loan. This would avoid dealing with traditional lenders altogether.

Partnership: Consider bringing in a partner who can provide the $140K in exchange for a share of the rental income or future appreciation.

Cash-Out Refinance: If you have another property, you might be able to do a cash-out refinance to pull out the necessary funds.

Best of luck!
KC