RentToOwn-HouseFinder.com

Can someone rent to own a home from someone that has two existing loans on it?

This person needs to get these payments off of her hands. She is willing to let someone rent with the option to buy. Can this work? One mortgage balance is $115,000 and the other is $30,000. Someone may be interested in paying off the $30,000 and then make payments to the $100,000 with the intentions to own. I am a young new realtor with soooo much to learn. PLEASE HELP!!!

Public Comments

1. Sure but this really doesn't (typicaly) have anything to do with the mortgages. The renter pays the owner whatever is agreed to, and the owner then pays the mortgages. If the owner makes an agreement to sell the place (down the road) for less than the mortgage balances then when the renter excersised to option to buy the owner may nonetheless not be able to sell (since they'd have to come to the closing with money they may not have). This would inevitably set up a lawsuit. Still, back to the question, the owner and renter can execute a rent to own agreement regardless of the mortgage situation. Again, the renter pays the owner and they then pay the mortgages. Not exactly sure what would happen if an owner did this and then was foreclosed on (probably another lawsuit).
2. The person who owns the home and the two mortgages is responsible for those mortgages. If they want to rent to someone else (whether rent to own or whatever), that's fine - as long as the mortgage gets paid. One thing to be aware of is that many mortgages and insurance require the holder of the mortgage or insurance to have that place as their primary residence (otherwise it costs more). This may not be a problem with mortgages - I don't think they care as long as they get paid - but for insurance, if something happens and someone makes a claim and it turns out the person(s) living there were renters and not the one who took out the policy, insurance might deny the claim. So you'd need to check the policy and perhaps get a rider so the renter is covered. Other than that, no one cares, although when the deal is up, both mortgages will have to be settled before the deed transfer can be completed. It would be a good thing to have an attorney (maybe for each party) make an agreement that covers all bases.
3. I'm sure the mortgages require the lender to sign off on any change in ownership (even an agreement for future change) - because those loans would need to go to the buyer upon purchase.