Mortgage .. Mort-Gage.. I mean what the heck does that even mean?
For many, even the concept of being lent all that money brings on terror and dread…
Heck, they kinda scare me.
And once I found out what the word “literally” means… I was really quite shocked!
Well, it translates to “Death Pledge”!
The GOOOOOD news is that through time, experts have figured out LEGAL ways to get out of your mortgage and get creative so that these so called death pledges don’t derail our the lives of us hard working folks.
Actually did you know that South Florida has the 5th largest denial rate of mortgages in the country!
So if you’re reading this and have a mortgage you already have the upper hand. And with the tips and trick I am going to teach you here…
YOU WILL HAVE SUPER POWERS!
Need to get out of a mortgage? (2 most common reasons for Miami homeowners)
So there are 2 common reasons why South Florida homeowners need to get out of their mortgage. By the way this is perfectly normal.
In Miami-Dade 4.78 percent of homeowners and in Broward 6.5 percent of FHA homeowners are in default or can not afford to make their payments.
YOU ARE NOT ALONE.
Life happens and we understand this. It is one of the main reasons we exist and are in this business.
So here is the first reason:
“I can’t afford to make my mortgage payments anymore”
This is a difficult situation, but as shown, can absolutely happen to anyone. The good news is there are a number of good legal options for you to be able to get out of this safely. We will go more in depth later but here are a few:
- Walk away kindly. When a house is worth less than the amount owed on the home, some people in South Florida will hand over the keys to the bank and simply stop paying. Notifying the bank will make this smoother.
- Deed In Lieu
- Rent the place out and cover your mortgage. This is great for the Miami and greater Ft Lauderdale areas.
- Sell to a company that buys houses (Company Image)
- Strategic financing to a buyer (Ninja Trick of the day)
“I need to get out of my mortgage or sell this house to buy another one”
So if this is the case you are in a bit better position. This means you are looking to upgrade or maybe change your living situation.
This is also known as “Porting your Mortgage”. What this means is if you are selling your home and buying your next home at the same time, then you are allowed to transfer your mortgage.
By the way, we have some mortgage rockstars we can refer you to in order to answer all these questions. Just hit us up here (firstname.lastname@example.org).
Random Fact: In Jacksonville, Florida homeowners stay in their homes about 12 years before they move on to their second one.
The main way to be able to do this legally is this simple 3 step process:
- Find out what your mortgage payoff or balance is
- Speak to mortgage broker and see what you can afford for your new house, based on credit, income, and mortgage balance.
- Buy new house and allow the mortgage company to payoff the old loan 🙂
7 legal ways to get out from under a mortgage in Miami
#1: Walking Away
So this is the easiest one, but unfortunately, the one that can hurt you the most. When you walk away and stop paying the bank, you basically are foreclosing and defaulting. This means you are not complying with your word to the bank and that gives them the permission to take ownership of the property. This works if you have tried all the other options and you just want out.
#2: Deed In Lieu
Whoever came up with that phrase is awesome, gets me everytime. Anyways, Deed in Lieu is a fancy way of saying surrender the deed (ownership) back to the bank and in return they satisfy your mortgage. So in simple terms, you sign a piece of paper saying “Hey I’m not going to pay anymore, you can have the house. But I will only do that if you take away that I owe you anything”. This is good because it avoids foreclosure and does not mess up your credit.
The word sounds scarier than what it is. Well, it is not good, but you get what I mean. A foreclosure is the process of the Bank trying to collect what is owed to them from the mortgage. In this particular case, the way in which the bank gets their money back is by taking the home. They take over and they sell it to recuperate the money. This is bad for the homeowner’s credit, however you can buy another house with an FHA (Federal Housing Administration) loan after 3 years of the foreclosure. The popular thing to do is to stop paying, let the bank go through their process and continue living in the home until they tell you to leave. This usually buys you a few months in the home.
I really like this option if you owe more than what your house is worth. What does it mean to short-sale a house? Basically when you are upside down on the value of the home and mortgage, you can list the property for sale and negotiate with bank to lower the mortgage and sell quickly.
Here is an example of a house we purchased in Miami Gardens as a shortsale.
(Thinking of this now, we have purchased about 100 short-sales). Anyways, the owner on this property owed $240,000 to Bank of America. She purchased the home in 2006 (Peak of the Market).
When the market crashed, things went down substantially. In Miami Gardens and Opa Locka it dropped about 86% in value! Crazy.
So in 2013 we got in touch with Keisha and she was in the process of short-selling the home with a Real Estate Agent.
We now have Agent’s on our team that can help with this for questions can email us (email@example.com)
We ended up purchasing the home for cash at almost half the value, because that is what it was worth at the time! $127,000
We closed quickly and the BONUS is…
Keisha ended up staying in the home we rented it to her and her family for over 3 years 🙂
#5: Rent it out
Become a Landlord, that is such a powerful word if you think about it lol. However this can be really good or not so good. I’ll give you a quick rundown of the pro’s and cons here. The idea of this is that the amount of rent you can get for the property will cover your Mortgage and your insurance.
If you pay $1500 per month between mortgage and Insurance and it rents for $1800, you’re in the clear! Then what you do is have the tenants pay utilities which is completely normal.
Ok so I just realized I skipped a step.
HOW THE HECK DO I KNOW WHAT MY HOUSE RENTS FOR?
I got ya…
Here is an example of a house we purchased in North West Miami:
3075 NW 59th St, Miami FL 33142
- Type the address in Zillow.com and click for rent under listing type.
- Look at the purple dots and compare how much they are renting for and the type of house it is.
Ie. This home is a 3 bed 1 bath so I am going to look for similar homes in bed and bath and square footage.
Check these out
POP QUIZ… What would you rent it for ?
Ok you can’t talk to me but i’m hoping you would say somewhere in the middle of $1600-$1800 is very safe.
I’m actually rented at $1,590 right now cause I love to provide good deals to the community 🙂
If you are actually looking to rent or know anyone who is interested in renting, you can reach out to us at firstname.lastname@example.org.
We always have new properties being rented.
#6: Sell to a company that buys houses
This is basically pressing the EASY button. If you have a mortgage and have “Equity” this is a really good option. When I say Equity it means that the house is worth more than what you owe.
So lucky for you I have another example of this.
Carol was the seller and had a house in Miami Gardens close to St. Thomas University. (GO BOBCATS)
Here was the challenge:
She owed $163,069
House was AS-IS about $165,000.
As you can see there is not much room there to play with.
House was also rented for $1,400 when everything else there was rented for $1800!
I know I know Crazy…
So here is what we did..
We saw the potential value in putting money into the house and fixing it all up and selling for around $230,000.
We asked her to speak to her tenants and see if we can pay something so that they can find a new place in a timely manner. Turns out the tenants wanted to leave!
We bought the house for $165k and we paid all the closing costs so that she came out free and clear of the situation.
Carol and I are still friends to this day 🙂
#7: Strategic Financing to an Investor (Ninja Tip)
Now this might blow your mind… Investors like us can LEGALLY purchase your home and take over all mortgage payments and insurance with no cost or risk to you.
Yep. So let me break this down the best I can without being a complete NERD. There are certain clauses written in your Mortgage and they allow for your property to be put in a Land Trust for protection purposes.
Why does this matter..
LETS SAY your home in Homestead Fl is worth $200,000 and you OWE the bank $199,900.
There is really not much room there to do anything.
So US creative investors, we can say “Hey we can offer you $5k-$10k for your moving expenses and we can take over the mortgage and insurance by putting it in a land trust.
Basically we put it under that trust and we just start making the payments with our bank account and change the insurance to our name.
WE pay taxes, maintenance, deal with tenants and take over. And our goal is to rent it or fix it and refinance it with a bank under our name eventually.
This is called a “Subject To” transaction.
Here is a really good article that goes into a bit more in detail:
The last one you might already know, but I will touch on it for a bit, is REFINANCING.
This is great if you have a partner or EX that you kinda wanna get rid of yesterday lol.
How it works is if you have good credit or you meet all the Mortgage requirements on your own you can refinance your home up to 95% of value.
Now don’t quote me specifically on this because there are a ton of mortgage programs out there. However this is a possibility.
In conclusion guys and gals, Mortgages don’t have super powers.. YOU DO!…
Between these options:
- Walking away kindly.
- Deed In Lieu
- Rent the place out
- Sell to a company that buys houses
- Strategic financing to a buyer (Ninja Trick of the day)
You have more than enough tools in your tool shed to outsmart the mortgage man.. Muahahahah
We are here for you if you need us, but given this, you KNOW it’s possible.
Most importantly it is legal and it is your right to be able to have the knowledge to get what you want and deserve.
Life happens, It’s perfectly normal. Use this info and make educated decisions
This is the SOLE reason we exist as a company!
I hope this helped… See you on the next one.