A private mortgage can be moved from a senior to a junior position. Take a look at the following situation: A seller has a property on the market for $60,000.
There is an existing private first mortgage on the property in the amount of $30,000.
Approach the private mortgage lender to see if the mortgage can be moved from a first position (senior) to a second position (junior) if you pay $10,000 in cash. Agree to pay the cash after a new first mortgage is secured. This will reduce the mortgage from $30,000 to $20,000. Next, put a new $40,000 first mortgage on the property; $10,000 of this will be the cash that goes to the private mortgage holder and the other $30,000 ($40,000 less $10,000) will go to the seller. this no money down technique works well when the mortgage holder is not willing to discount the mortgage in return for a complete payoff.
If you own property that has a private first mortgage, you could use this same technique to remove your equity for other investment purposes. However, many people like the security of having equity in their homes.
|Example Summary Technique #8|
|Move A Private Mortgage From A Senior To A Junior Position|
|What You Need To Begin:|
|Summary Of Terms:|
|Agree to pay the mortgage lender to move mortgage to a junior (second) position.|
|A new second mortgage results from this transaction.|
|Obtain a new first mortgage.||$40,000|
|Pay second mortgage holder.||$10,000|
|Pay the balance to the seller.||$30,000|
|The seller receives $60,000 for the property and receives all cash for equity in the property.|
|The buyer has a no money down deal, a $40,000 new first mortgage and a $20,000 second mortgage.|
|The original private first mortgage lender now has a second mortgage but has received $10,000 in cash.|
|Specific Situations to Apply Technique #8|
|Existing 1st or 2nd Mortgage Private|
Next Technique Bank Loan