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Thread: I need some real estate advice

  1. La Xicana
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    I need some real estate advice

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    So my aunt came to me today for a favor, and I'm not sure what to think because I don't know anything about real estate.

    She lost about 75% of her income this year because her hours at work were cut back drastically. But before this happened I guess she put in to refinance her home. Well in the process of re-financing is when her income changed and now they don't want to approve her refinancing and she is under threat of her home foreclosing. She doesn't have a problem paying the house bill anymore because she rented out 2 of the rooms in her house, but because her income no longer qualifies she's in trouble.

    One of her options is to sell her house in a short sale, and if she can find someone herself that can put in the offer, meaning me, then the home would be up for short sale at $70K, as opposed to the $210K that she originally bought it for. So if I put in a bid and it was accepted, she would pay for all the fees, bills, and she'd continue to pay the mortgage for a year. The home would go under my name, but she would send in the payments to my account with her name on them so that she can show continual proof that she is able to afford the house. After 1 year she will gather all this proof and show the bank she was able to pay for the house bill for an entire year. At that time, she would pay another fee and the home would then be put back under her name and the house would come off my credit.

    I still have to call the Realtor tomorrow to get more details because she explained as well as she could, but I need more information on the details. I really need to know what the pros and cons of this will be. I know the pros sound like I would get this good thing on my credit, and at the end of 1 year my aunt said she'd give us like $3-4K for compensation on helping her out. She has renters in the house, so with what they pay her for rent, that pretty much covers the house bill, so there isn't much danger of her not being able to pay the house each month. But I don't know, I need to know what the cons of this are, so I'm going to try and get that information tomorrow. J is really not sure about this, it seems like a pretty big endeavor and doesn't want us to get into a bind.

    Anyway, I guess what I'm asking if you have any advice on all of this?
  2. La Xicana
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    #3
    1) you would have to make sure that you would qualify for the loan, yourself. If you already own, buying a second home isn't always easy, because of the income to debt ratio.
    2) IF for some reason, she could NOT make a payment... could you make it, financially? What if she is late? That goes against you.

    In 1 yr time, she will have to be able to aquire a loan in her own name.... Will she have the required income at that time? They don't care if you make payments... they care that you have the income, otherwise they would have taken that for the refi.

    She is looking at up to 10K in fees, to sell, then buy. Plus what she says she wants to give you.
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    #4
    I know you want to help your aunt out, but personally, I don't get involved in money ventures in my family, except with my father and business. If something were to happen, and she didn't make the payment, that would be 100% on you and your credit. Accidents and catastrophes happen all the time, you never know what could happen in a year that could prevent her from paying. Not saying that she would purposely sabatoge you, but it could happen. Unless you can make that payment for 12 months on your own, I wouldn't even consider it.
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    #5
    Quote Originally Posted by CCArmyWife View Post
    I know you want to help your aunt out, but personally, I don't get involved in money ventures in my family, except with my father and business. If something were to happen, and she didn't make the payment, that would be 100% on you and your credit. Accidents and catastrophes happen all the time, you never know what could happen in a year that could prevent her from paying. Not saying that she would purposely sabatoge you, but it could happen. Unless you can make that payment for 12 months on your own, I wouldn't even consider it.
    Totally agree with this
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    #6
    you would have to qualify for the loan, a short sale is a sale- you will own the home, be 100 % responsible for it.

    if you already own a home this would be considered a second home or an investment- for both you will most likely have to have a 20% down payment to buy.

    also your aunt will be a "renter" and will in fact have to pay for 2 insurance policys- the fire policy on the home ( as "owner" ) and a renters policy for being a tenant.


    for the short sale- the contract is between you and your aunt- BUT the bank has over all control over whether they accept the contract. and since it is so low- there is a good chance they will not. ( depends on what your aunt owes on it)

    when she wants to by it back in a yr- she will have to requalify for a loan, just like any other time. and you will have to sell it for at least what you owe on it- or you will pay out of pocket at the closing.

    I suggest talking to a real estate attorney to get all the facts.
  7. La Xicana
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    #7
    Thanks everyone for your responses. I do know that its possible my loan request wont be accepted and so does she, so this attempt would just be a long shot. If she doesn't do this by January 9th her home will be foreclosed on so she's willing to try anything. I don't currently own a home, I don't have bad credit, but I also don't have a very high credit score due to debt to income ratio, and she knows all of that. Any closing costs or fees she made clear to me she would pay for all and anything associated with it. Even though her hours have been cut back, with what the renters give her she is able to make the payments on the house and has been able to put a little money aside to pay for these fees. However with all that said I am also still skeptical of all of this because I am so naive when it comes to real estate stuff because I've never purchased any type of real estate. And maybe if I had more time to really look into it but I don't know, she needs this done ASAP because of the time constraints on the foreclosing of her home. One one hand I feel terrible if I say no because I know I likely have the means and she is my family, but at the same time I just feel like I just don't know enough about this stuff. I talked to J about it last night a little and he's not really sold on the idea at this time either. I called the realtor this morning but she's not in yet, so I will talk to her some more later today to get more detailed information. At this point I'm still on the fence, I know she's in desperate need of help so I'm so torn between helping out my mother's sister and the time crunch on trying to get all the facts
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    #8
    Well I will give you Susie Orman's advice. Could you afford the house payment if your Aunt didn't pay? She is the financial expert I love to watch, and when people talk about getting a second house (sort of your case since you will have rent and a mortgage), she always asks them if they can afford the second house if they can't find tenants right away or something changes with the market and can't find a tenant at all.

    Also, my gut would tell me not to do it. I personally, am a lot like you and would do ANYTHING for family, but money is one thing that I will not do anymore. I mean loaning $500 or something, yeah, but a house and a mortgage is a huge huge deal. Plus, the bank might not accept the offer. There are some loan modification programs out there too that can help people out. I think they live in the foreclosure and wait for approval for the government and then get refinanced at an affordable rate.

    My advice would be to help her find a second job or some other hours. What does she do? Maybe we can find some work at home jobs for her spare time?

    Either way, good luck with your decision and even the fact that you are thinking about doing this says volumes about how much your care about family.

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