Gather More Information Before You Sell Then Rent Back Real Property
Real property has always been a hot commodity and even in a time of economic downturn, this has not changed. As a matter of fact, even in the current mortgage crisis and subsequent drop in home prices, the housing market is going strong, although it is involving different players.
Not too long ago, the market was dominated by eager buyers with varying levels of qualifications for making that step from renters to homeowners, while mortgage brokers were eager to fill the orders received. Today, the market is dominated by desperate homeowners who are backed against the wall by adjustable rate mortgages and interest only loans which are now becoming impossible to pay. This had led to investors taking on the role of buyers and homeowners are relieved but also puzzled to learn that a new trend is forming that sees homeowners sell, then rent back the real property they previously purchased.
If you find yourself in the position of needing to avail yourself of an investor’s help to get out from under an unaffordable mortgage loan, it is wise to remember that there are also scam artists and conmen in the market who are seeking to usurp the business that would normally go to reputable investors. Thus it is crucial to educate yourself before you sell then rent back real property of any kind, but especially the one house that makes your personal home!
The process of selling and then renting back is simple:
- An investor will offer to purchase your home for below market value. Costs and fees are negotiated with the investor.
- You sell the home and pay off your mortgage holder.
- The investor offers you the option to rent back (not buy back) the home for a specified period of time. Once again, negotiation will determine the terms of the agreement between the parties.
- You may now rent back the home which you previously owned, pay a set monthly rent, and transform from mortgage oppressed homeowner facing foreclosure to renter who is free to pay off other bills.
When you decide to go ahead with the plan to sell, then rent back your home, discuss the terms of the sale in detail; understand the terms of the lease, and seek to negotiate with your mortgage lender to ascertain if it is possible to waive some of the accumulated fees and charges in lieu of a quick pay off. If your property is getting close to foreclosure, your mortgage lender might be more willing to go ahead and drop some fees and reduce the overall payoff amount since even this will most likely be more money than the lender could hope to recoup during a foreclosure sale. At times the investor may have an in with the mortgage company you are using and perhaps there will be ways you can use this relationship to your advantage in an effort to reduce the payoff amount of the home, thus freeing up more funds with which to pay other bills.
