P.D. asks from Inglewood, CA on August 21, 2009
Need Advice! - Buying a House That's Already Paid
Hello Mommies! I need your advice. Here's the situation... My in-laws are experiencing financial hardship and were about to lose their house. A very good friend of theirs offered to help by buying the house and paying for it in full (no mortgage). Last I heard, the friend had already contacted the lender and signed papers. My FIL is suggesting that we (my husband and I) rent the house from their friend with option to buy after a year. At the moment we are renting an apartment and have never owned a house. The house itself is nice with a big yard, close to freeways and in a good location. Does this sound like a good deal? Should we agree to rent then buy? I'm not sure who I should contact about this. Should I call a lawyer or a lender? Will this affect my credit score? What about taxes? Thanks for your help :)
1 mom found this helpful
So What Happened?™
Thank you so much, Mommies! I've received such great advice. My husband and I will consider looking at other properties first before we finally decide. We had a chat with my in-laws and we told them we want to have something on paper first, have someone review it and we'll go from there. Thanks, again. You are all wonderful. God bless!
S.G. answers from Los Angeles on August 22, 2009
Hi, everything will depend in how the lease agreement is write, read everything before signing in. I don't know if is a good deal because I don't know the price but now is a good time to buy a house. If you are buying without getting a loan from the bank (direct from the owner like looks like) usually they made a Trustee's Deed with the interest rate and based on that you make the payments direct to him or if you have an ok credit you can may be get a lower interest rate with a bank.
E.Z. answers from Los Angeles on August 22, 2009
Sounds to me that the house now belongs to the friend. (You said papers are signed).
IF you were to rent the house from this fellow, you'd need to keep a few things in mind.
1) What are the going rates for RENT in that neighbourhood.
2) What is the value (if you'd market it) of the house NOW.
3) Market is declining - most likely the value of the house a year from now will be less. (All depends on WHERE this house is????)
4) If you are leasing - you will NOT pay any property taxes - that only falls into place when the title is transferred into your name. Depending on area it's a percentage of the PURCHASE price. Lets say you live in LA county and you buy the house for 500K. LA county dictates a 1.10%, so your property taxes would be roughly $5500 / year. (paid in two installments)
5) Some cities have a TRANSFER tax that you pay ONCE when the title goes into your name. This varies from 1.00%(Sacramento) to 15% (Oakland) in California. Also based on PURCHASE price.
6) Is this something that YOU want. Never mind if it is a great deal. In these days you do NOT want to get stuck in a house that you cannot sell if you later on discover that perhaps the neighbours suck, the schools are terrible etc.
If you are in the LA area - and need comparables to look at, I can get you that. I'm also a realtor in the South Bay- like some others that answered.
Good Look, and ponder this some more!
2 moms found this helpful
H.L. answers from Los Angeles on August 21, 2009
Just keep all paperwork and make sure you do a lease with option (staples usually has them) pay with check to keep a paper trail. We did a lease with option and it was great, we didn't have to pay a big down to purchase we refinanced it into our names. Also make sure you get a monthly amount (100. or more to go toward purchase and that goes back to you if you dont purchase.
1 mom found this helpful
M.M. answers from Los Angeles on August 22, 2009
Lots more info is needed to see if this is a good deal. My husband & I are both Realtors in the South Bay (he was born at Inglewood Hospital). My husband has also had his own Appraisal business for 10 years so he's very good at valuation, something a lot of us Realtors need help with. Here's his website http://www.davemonty.com/
If it is a good deal, you could do a "lease option to buy" which can be beneficial to you because you lock in a price to purchase & you have the "option" to buy at that price within a time period. You are not required to go through with the sale if values go down or you decide you don't want the house afterall. The seller however is required to sell to you at the agreed price, even if values go up.
Is it possible for you to do this directly with your parents & not the "friend" that went to the bank already? I'm not sure what the situation is with your parents. Where are they going to live? Could they hang onto the house if they had you paying them rent and then wait to sell until values went up? If they go ahead with the sale, I would at least make sure they are getting fair market value or talk to the bank about doing a loan modification so they can keep their home.
1 mom found this helpful
S.A. answers from Los Angeles on August 22, 2009
My other suggestion to you is to check the schools in the area to make sure they are good. It almost does no good to buy a house and then find out that the schools in the area aren't great, and you have to go private somewhere else.
1 mom found this helpful
E.S. answers from Los Angeles on August 22, 2009
I'm a little confused, did the friend buy the house for your in-laws, for him to live in our as an investment ... First you need to figure out what the purpose of the house is and then make a decision based on that. Buying real estate is always a good investment providing you buy at the right time and for the right price.
C.M. answers from Los Angeles on August 22, 2009
Hi P. -
This sounds like a wonderful opportunity to get into a house, something that has become nearly impossible for many people these days. You probably should talk to a lawyer, just to make sure all bases are covered & made clear what's expected of who, and when it's expected.
And might as well start with a good mortgage broker sooner rather than later. Things are changing fast & who knows what great loan possibilities will have been created a year from now? But you could at least set yourselves up with someone you like. I know a wonderful woman who works for a good brokerage company in the south bay area if you would like a referral. We worked with her family for 12 years until we sold our house earlier this year.
All the best to you,
M.D. answers from Los Angeles on August 22, 2009
A few things...
First, I think you need a Realtor, someone who is going to look out only for your best interests and guide you through the process.
Second, it may be a great deal, but before you make the decision, look around. It's a big deal to buy a house or commit to lease to own a house. See what's out there, decide what you like and what you want. It doesn't cost anything to look!
If you need any help. I am a Realtor in Orange County...you can check out other houses in your area that are for sale on my website if you want. If you need any other help, let me know. I love working with first time buyers!
A.P. answers from San Diego on August 22, 2009
What a great opportunity! Do it!