All Forum Posts by: Scott Celley

Even in North Jersey most closings these days are performed by a title company working in conjunction with an attorney. Usually the title company charges a small administrative fee for the service when they have the policy for the purchaser/bank on the transaction. Ideally, the fee you pay your attorney should reflect the assistance they receive from the title company. Once you find your "investor-friendly" attorney they should be able to provide you with the names and contact info of the title people they work with.   

I could help you understand the legal entity options in NJ even though I am a little far North of you. 

@Andrew Hofing Yes, you get the seller's original rate. No, you cannot purchase in the name of your LLC (and assume the existing loan). Both FHA and VA have an owner occupant requirement. However, you can purchase it in multiple names if one of the individuals intends to live there.

Sound logic Robert, but you didn't consider the security interest of the bank. In the first scenario where the property increased in value from $250,000 to $400,000 the bank has very little default risk for their 5% revenue. In the second scenario where the property has depreciated well below the original loan amount the bank has a high risk of default for their 5% revenue. Financial institutions consider risk as well as return when making their lending decisions.

You probably already know that your hypothetical falls apart in a competitive banking environment. In that case there's little chance that the bank would get the new $400,000 loan. Unless they have a very high market share for the area, another bank will most likely get the loan. So instead of gaining revenue, they probably lose it.

Mitch, between FHA and VA there are 9 million assumable loans in America, or 1 out of every 6 mortgages. This number exploded over the last five years as the government propped up the mortgage market in the wake of the financial crisis. I would no longer say there are "very few" assumable loans. The assumability of these loans (FHA/VA) is NOT determined by the lender. As long as the buyer passes a creditworthiness review the lender must allow the loan to be assumed by a qualified buyer.

Finding properties with assumable VA or FHA is not difficult anymore. There are a number of websites that have assumable listings, most notably Zumption, but the problem is with your intention of being an investor. Both FHA and VA program require you to be an owner/occupant, although I am not aware of any cases where either of these loans were called in when someone purchases the property with the intent to live in it but then subsequently decides to rent it out. A slight hiccup with VA loans is that if the assumptor is not a veteran or serviceman then the seller cannot take our a new VA loan until the old one is paid off. If the assumptor is another vet than the seller can get a new VA loan.