Property with a Variable Rate Mortgage

JimSicotte

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When taking control of a property with a variable rate mortgage, what is the simplest and most effective way to cover the sellers payments?
 

Thomas Beyer

Senior Forum Member
REIN Member
QUOTE (Jim @ Nov 26 2009, 11:53 PM) When taking control of a property with a variable rate mortgage, what is the simplest and most effective way to cover the sellers payments?
from cash !

cash comes from your own jeans, an investor or from rent !
 

JimSicotte

New Forum Member
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QUOTE (ThomasBeyer @ Nov 26 2009, 11:58 PM) from cash !

cash comes from your own jeans, an investor or from rent !


Thanks Thomas. What I am getting at though is that because the payments change every month, in an Agreement For Sale how do we best account for those changes when writing up the agreement? Is it best to set up a new bank account with the seller and have auto withdrawals coming from that account.

Anyone have any experience with this?
 

MarkKruse

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Registered
QUOTE (Jim @ Dec 11 2009, 01:12 PM) Thanks Thomas. What I am getting at though is that because the payments change every month, in an Agreement For Sale how do we best account for those changes when writing up the agreement? Is it best to set up a new bank account with the seller and have auto withdrawals coming from that account.

Anyone have any experience with this?

Hi Jim.
You seem to be asking two separate questions here:
1) How to make sure the AFS payments are going to the original loan institution. A combined bank account where only the lending institution is allowed to make withdrawals is a reasonable approach. It is also extremely prudent if your seller has very little "skin in the game".
2) How to make the payments in your AFS match the payments in the original mortgage. When you write up your AFS agreement, you will attach an AFS Financial Schedule document. This outlines the principal, interest rate, payments, term, etc. You can set it up with exactly the same conditions as the underlying mortgage.

Hope that helps,
Mark
 

Thomas Beyer

Senior Forum Member
REIN Member
QUOTE (Jim @ Dec 11 2009, 01:12 PM) Thanks Thomas. What I am getting at though is that because the payments change every month, in an Agreement For Sale how do we best account for those changes when writing up the agreement? Is it best to set up a new bank account with the seller and have auto withdrawals coming from that account.

Anyone have any experience with this?
payments are USUALLY NOT VARIABLE !!
 

JimSicotte

New Forum Member
Registered
QUOTE (MarkKruse @ Dec 13 2009, 02:03 PM) Hi Jim.
You seem to be asking two separate questions here:
1) How to make sure the AFS payments are going to the original loan institution. A combined bank account where only the lending institution is allowed to make withdrawals is a reasonable approach. It is also extremely prudent if your seller has very little "skin in the game".
2) How to make the payments in your AFS match the payments in the original mortgage. When you write up your AFS agreement, you will attach an AFS Financial Schedule document. This outlines the principal, interest rate, payments, term, etc. You can set it up with exactly the same conditions as the underlying mortgage.

Hope that helps,
Mark


Thanks Mark. Setting up the joint account seems the best. I will work out the details on the payment side. It`s a variable, interest only, and the payments change when the interest rate changes, but if its coming out of the joint account its easy to keep track of without having to communicate with the seller monthly.
 
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