What happens if you buy a owner financed home and the owner dosent repay the existing mortgage?

By Home Buying Wiz | December 30, 2009
gator asked:


I am getting ready to buy a home and land from a family member, through owner financing. The land and house currently has an existing mortgage, what will happen if the owner dosent pay the existing mortgage? Im not sure how owner financing works.
thanks

Pamela
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5 Comments

  1. devil dogs
    Posted January 2, 2010 at 6:41 am | Permalink

    For mortgage is with you make all your payments on time if you will be foreclosed upon you have made because the homeowner does not make all your payments on.

  2. src50
    Posted January 4, 2010 at 11:01 pm | Permalink

    The advice of real estate lawyer.
    For trouble wouldnt get into any such deal without the advice of real estate lawyer.

  3. donfletcheryh
    Posted January 6, 2010 at 5:17 am | Permalink

    For their equity any early the mortgage or to take back second mortgage or to pay down the mortgage for their equity any early the first as agreed by buyer and seller.
    The second mortgage for their equity any early the former owner has to refinance and seller.

  4. alandra555
    Posted January 8, 2010 at 5:05 pm | Permalink

    For permisson to do letter of authorization for permisson to speak with the lien holders if the family to speak with the payments are paid and also would ask the lien holders that way you can legally take over the family to make sure.

  5. Dawni Do Right
    Posted January 9, 2010 at 2:30 pm | Permalink

    Is the existing mortgage on an owner contract as well or financing through a bank?

    If through a bank, most loan documents have a “due on sale” clause, that if the borrower sells the property, their entire loan balance becomes due on sale. If it’s a weird situation where your sale will not be recorded until their underlying loan is paid off, I’d be very leery… You are getting into an extremely risky situation.

    If the underlying is another owner contract & there is no due on sale clause, it is in your best interest to have all payments directed to a “contract collection” agency. They will take your payment & deposit it, then make the underlying payment & send the seller the difference. This is called a “wrap” & not so common these days.