Is it good to let someone take over payments on my house or is foreclosure better option?

Velvet
Someone is going to buy my house on contract, meaning they are taking over payments and will own the house, the house is still in my name. A contract will be made up and they will agree to make payment until they can refinance and put the loan in their name. Is it better to do this than foreclosure?

Bong
on the surface these always look like good ideas but...on the sellers side..you are liable for the mortgage, they buyers could simply not pay or worse yet sub rent it to someone else. They could cause code enforcement issues, destroy the home and you would be the one to clean up the mess plus lawyers fees and could take up to a year to get them out while they go on free living. on the buyers side..you could declare bankruptcy and they get put on the street. You could be collecting the payments and pocking the money and the home goes into foreclosure. You could get a judgment against you and it is attached to the property. Very, very rarely do any of these agreements ever work out to the end. It always works out very badly for the seller, the buyer or both. But lawyers are always happy about them. Even if you have to take money out of your pocket to do a traditional closing your liability ends then and you can move on with your new life without fear and concerns about the past.

Ismael
This can be a very good or a very bad situation. The bad side:Most mortgages have a due on sale clause. This means, if you sell your house then the mortgage is due in full. A mortgage does not transfer with the house. Also there is the the possibility that the buyer will not pay the mortgage. If this happens you are still liable.The Good side:If the buyer is reputable he will make the payments until he can refinance. This can take any where from a few months to a few years depending on the market and the buyer. As long as the loan is caught up and the payments are made it will keep a foreclosure off your record.I have done this 3 times. The 1st house i could not refinance for three years. The second I refinanced in 3-4 months and the third I have owned for 8 months now and am trying to refinance now. In all 3 cases I have been able to help people by purchasing a house they could no longer afford and by stopping a foreclosure form their credit. When we did the deals we used a title company and had everything written and recorded.Yes this is better than a foreclosure.

Kraig
Both answers are correct. You take the risk of the new owner not paying the rent/mortgage while you are still on the loan, thus your house goes into foreclosure and you have no control over the property. The best way of doing this transaction where you can retain control of the house and evict a non-paying tenant is to use a land contract to transfer property. The best way to do this is by using Bill Gatten's PACTrust. Also, there is a rental skimming scam where someone offers this solution to you and they pocket the rental income while the home goes into foreclosure. So they just made the rent of 2-8 months while using no out of pocket or risk.If you are facing foreclosure because of a temporary hardship, look into a forbearance agreement with your lender. If you are facing a hardship due to lower income or an adjustable loan, look into a loan modification. Worst case scenario, do a short sale.

Eun
On the surface is sounds like a good solution for everyone. Your credit may be saved (may be not), the lender still gets the note paid off (may be not). Make sure your lender is involved. Who will draw up the contract? If the buyer defaults, your credit is still shot as your name is still on the loan docs and the buyer bears no risk if he defaults. What if the buyer cannot get the home financed in his name?Mortgage companies have not allowed assumable mortgages for several years. This is similar to (but not exactly like) an assumable loan. It's also a lot like rent with an option to buy. Make sure the payments are not counted as taxable income to you. Who's going to get the mortgage deduction? You should until the buyer gets the home financed. That's a motivation for him to get the financing.The best solution is to get the buy to finance the home in his name.

Raleigh
You should seek out a real estate attorney. There are different ways of accomplishing a transfer to another party and "assuming" the loan is only one of them. There are also land contracts to consider, and each option has its own positives and negatives. Some, like land contracts, have complicated state laws governing how they need to be written to be legally effective.It will take a lawyer in your state to wade through the options for you. Call your local bar association for someone specializing in this area. http://www.foreclosure-fight.com