RE / Home Buy/Sell Question

[~attrACTION~]

Just wondering...

Let's say I get a loan to buy a home that's $300k-$400k. I'll be paying some amount of money per month. If I sell the home, will I receive the dollar value of the home, say $300k? Or will I only receive in my possession, the equity that I have at the time?

What I am really trying to do is get a loan for $300k to invest in land/property in another country. I figure if I can get a loan for house, then sell the house, then I could use the cash elsewhere...

Is this possible?

Thanks for any responses/ info.

 

[Bonhomme]

The wording was a bit confusing, so I don't know quite what you're asking.

The reality of buying and selling houses is that the transaction itself costs a considerable amount of money whether you buy or sell. There are various up-front costs associated with getting a mortgage, as well as document processing, title insurance (which insures you and your mortgage company against loss of the property if somebody has a legitimate claim to ownership that was never cleared), etc.

When selling the house, you'll also have to insure the title, and pay transfer taxes, which in my state come out to a bit less than 1% of the sale price.

So, say you buy a house for $300,000, and get a $270,000 mortgage. You're likely to have to come up with about $35,000 at the time of the purchase to cover the down payment and all the fees.

If you sell the property for $300,000, you'll have to pay off the mortgage balance (which would hardly have changed if you made minimum payments and sell within just a few years), pay transfer taxes (about $2600 in my state), title insurance (about $1600 in my state, if I remember the formula correctly), and some other odd costs, so you would probably walk out with about $25,000, and lose about $10,000 net.

So obviously to make money on a real estate deal you have to allow a considerable "cushion" to allow for costs.

Also, it is harder for a buyer to get a mortgage if the prior owner did not own the property for long. Such requirements arose as a rather crude way to discourage some of the shady tactics investors have been using. Of course, monitoring appraisals better and more carefully scrutinizing transactions could render such ham-fisted anti-investor measures pointless.

 

[MagnuM]

Why the hell are you asking for financial advice in a online dating advice community?

 

[Bible_Belt]

Some of us do have a little experience with these things. There are a couple real estate millionaires here at ss. (unfortunately for me, I am not one of them)

If I sell the home, will I receive the dollar value of the home, say $300k? Or will I only receive in my possession, the equity that I have at the time?

If you have a mortgage, the mortgage company is the 1st lien holder. That means that you can't give clear title to the seller. No one would buy the house, because they would still owe the bank your mortgage amount even after paying you, because the home is not yours to sell. Typically, the lien holders are paid off, and then the proceeds go to you. So after fees, you only get sales price minus mortgage, which is your equity.

Good luck getting an overseas investment loan. I imagine it can be done, but I worked as a mortgage broker, and I had a hard time with it.

 

[~attrACTION~]

Thanks.

 

[Teflon_Mcgee]

Also be aware of what country you buy in.
Some countries don't respect property rights of foreigners and some don't respect property rights at all.

There have been quite a few stories of investors buying land and/or buildings and (in other coutries) then haveing the govement take possesion fro whatever reason.

 

[Francisco d'Anconia]

...What I am really trying to do is get a loan for $300k to invest in land/property in another country. I figure if I can get a loan for house, then sell the house, then I could use the cash elsewhere...

It's been done in the past but right now your typical lending institutions have tightened the requirements for granting mortgages. Unless you have a chunk of money for a down payment, have credit worthiness and can prove that you have a steady income, you will have a lot of difficulty securing funds.

 

[Bonhomme]

Unless you have a chunk of money for a down payment, have credit worthiness and can prove that you have a steady income, you will have a lot of difficulty securing funds.

At least at the best rates and terms. Used to be that any one of the 3 could get you a mortgage, but now it ain't like that.

It is well known that some self-employed people blow out their income with deductions, or make their money by borrowing against equity, so it doesn't show up at all (Donald Trump probably fits in this category), so if you're strong enough on 2 of the 3, you should still be able to get financing, unless you have a very bad credit score.

 

[backbreaker]

whoever is the titleholder of the property, in your case, the bank, gets the check for the sold house.

Once the title is transferred over you will get a check for the difference between the actual amount owed and the amount paid

 

[Ricky]

I'm sweating buckets at the prospect of buying my first ever home at the ripe old age of 34 now. Most of my friends have owned one or two places by now but also most have families.

I guess it's fear of the unknown in my part and my lack of knowledge about it, although the price tags and the sense of commitment are a bit for this lifetime apartment dweller.

 

[Bible_Belt]

This was on ABC news last night; real estate values are starting to decline in some major US markets. People who got 100% financing or who borrowed out every cent of equity are now finding themselves owing more than the home is worth.