Property not free and clear but has good equity

[Kevin Burton]

Im in the process of negotiating a wholesale deal . the property is worth 65K, the owner owes 27k, he wants 40k but im going to try to get him to 35k. ive never closed a deal that was not free and clear. and im kind of unclear on how im suppose to construct this deal. i know i have to have a letter of authorization to communicate with the bank but how do i structure the deal(contract) itself? please help. im suppose to call him back around lunch time today . im lost . thanks for helping in advance....oh yeah the house is move in ready. new carpet,paint, hvac,10 year old roof,plumbing,electric,hes just tired of being a landlord

[Bill Gulley]

You'll be buying "Subject-To" the existing mortgage, the seller will give you a special warranty deed excepting out the mortgage. You assume the payment obligation but you can't assume the mortgage legally as the borrower without the lender's approval, which is rarely ever given unless it's an assumable FHA or VA loan.

Look to the due on sale clause issues, search here for discussions on Sub-to transactions. I'd also suggest you find a loan servicer to collect payments and administer the contract. Search for "loan servicing" as to the issues of admin matters after the closing.

Get with an attorney on this deal. While there are other options, with the amount you're putting down you need to take title and that would be a Sub-To deal. Good luck :)