“Who Pays the Existing Mortgage?”

I hope all of you had a nice Easter Sunday. Sometimes in the midst of tons of kids, Easter eggs, candy and stuff, the true meaning of the day gets lost.

We went out of town to visit with my sister and brother-in-law for the weekend and while that’s always enjoyable, there’s nothing like your own bed is there?

Many of you have asked about existing mortgages on Probate properties so I thought I would take a moment and explain how all that works.

First of all, all mortgages are liens but all liens are not mortgages.

For example, the county may put a lien on a property for past due property taxes.

Your lender will ALWAYS put a lien on your property if they lend you money on it. You give them a mortgage on the property which acts as their proof of security for the money they give you for the purchase.

So both of these are liens but obviously only one’s a mortgage.

However, there’s really only one thing you need to remember.

Liens do not pass with title.

Let me repeat that.

Liens do not pass with title.

So that means at closing all liens on the property must be paid (by the seller) so that you will receive what is called “clear title”.

That’s why I am so insistent that for closing, you all use a title company or in those few states that still use attorneys, use a real estate attorney.

They will make sure that all liens are satisfied at closing and the property you purchase is “lien free”.

So when you are talking with the PR, you should always ask if there is an existing mortgage on the property. Almost always they will know because if there is, they will have been the one making the monthly payment.

As a sidelight, do you think writing that check every month might be a motivation for the PR to look favorably on your discounted offer?

I guarantee it is!

If a mortgage does exist, ask what the current balance is.

This really won’t affect you unless the balance is more than what you intended to offer.

For example, if you want to offer $190,000 and the existing mortgage balance is $200,000, you are wasting your time because you cannot close unless the seller is willing to bring in the $10,000 difference.

So once you know the existing balance and you determine the approximate price you are willing to pay, you will immediately realize if the property is worth pursuing.

But here’s the great part about Probate houses and why they are so attractive for you and me.

Over 65% of them are free and clear.

They do not have an existing mortgage.

Consequently the PR can be much more flexible when viewing your offer.

They may want to get say $200,000 but may very well accept your $165,000 offer if it’s free and clear. They certainly won’t do that if they have to pay off $175,000 to a lender.

Remember, often times the PR views the amount you are paying as “Free Money”.

This is one of the huge differences in Probate Real Estate and other markets of real estate investing.

See why so many folks think it’s such a great segment of the Real Estate market?

NO other niche has such a high percentage of free and clear homes and that’s a great advantage for you and me working in Probate.

If you would like more information on Probate Real Estate, please visit,

http://BuyProbateProperty.com

Enjoy your week!

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