Rental Property Investor · Pearland, TX · Member since 2016 · 25 posts · 7 votes
My mother in law owns a home here in Houston with a current FHA mortgage, but had to move closer to us (on the other side of Houston) for health reasons. So, she rented out the house using a property manager and relocated to another property we own, which is just 10 minutes away. Now, she would like to unload her house and says she would let my wife and I assume the FHA loan for what she still owes. It's a great opportunity because she probably has $50k in equity that she would essentially be passing on to us. My question is can we assume an FHA loan on the property, as non-occupants, while keeping the current tenants in place? This is my first discussion post, so I appreciate any input.
my first response would be no but since she already has a $50k equity that should cover the 20% down for a conventional loan. unless the house is priced higher than $50k=20% down.
also with doing it as a conventional loan you will not have any mortgage insurance saving a few hundred dollars a year.
my first response would be no but since she already has a $50k equity that should cover the 20% down for a conventional loan. unless the house is priced higher than $50k=20% down.
also with doing it as a conventional loan you will not have any mortgage insurance saving a few hundred dollars a year.
Thanks for your responses. In that case, trying to decide if it would be better to acquire the property at current loan amount ($90k) and refinance to get equity for other purchases or obtain a loan based on current market value ($140K) and get equity out after purchase in form of gift from mother in law. Either way, I think it will cost my a grip in down pymt/closing costs.
at those numbers if you roll in the closing cost when you refi, you might be able to walk away with 15k while leaving about 20% in equity in the house... if you can find a bank that will do that for you, thats what i would do.
Thanks for the input, Nikolas. That's what I was thinking. I would need to get some equity out up front to do my next deal, especially if I have to pay 20% down initially.
Hey @Winston Reed you may want to run this by a few lenders to see what options are available. Lenders service loans in many different ways from the big guys to credit unions and REI lenders. I'd first call your own bank and the bank where the current mortgage is located to see what they could do for you.
Hey Tommy, thanks for the info. Since my mother in law has rented the house out, I have to be careful about speaking to her lender because I don't want them to exercise the due-on-sale clause. However, I am in the process of speaking with other lenders about financing. The easiest way would be to assume her loan, but we are willing to get our own mortgage to purchase the home. Mother in law is willing to help in any way, so I think it's a no-brainer. Thanks again!