So I have a lot of life changing stuff happening here in the next 6 months and I have to get my credit back in order and start actually saving money.
One of the things I would like to do is try to buy back my grandma’s farm which is currently in a reverse mortgage and has been for close to 15 years. It’s only 10 acres and I’m hoping the property value hasn’t gone up too much in the last decade, since the last time I saw the property value.
Has somebody successfully done this here? I had somebody who hasn’t done it tell me that it’s a huge pain in the ass. This would still be a few years down the road, but I just want to get an idea of where to start and if this is going to be worth my time.
The property has been in my family since the early 1900’s and my relatives are no longer interested in pursuing trying to get the property back.
Thanks in advance.
I have nothing concrete to add, but it seems like there is a FMV for everything. Do you have access to the reverse mortgage paperwork?
Nothing to add either but there was an article a few months back that farm land values have surged across the country. So it may not be cheap as you hope to get it for.
In reply to SyntheticBlinkerFluid :
I'm not sure what the ground there is like, but I'm convinced most small rural IL towns & farms will get bulldozed and returned to tillable acreage over the next few decades. The way housing prices are falling, while farm ground continues to climb, is creating a staggering gap in property values. I've seen so many decent farmsteads razed & planted the next year.
I hope that's not true for your situation though.
Well when I call it a farm, it’s not a farm in the literal sense. It used to be a tree nursery and when my grandfather died back in ‘96, my uncles tried to sell off as many trees as possible, but couldn’t sell all of them, so there are a lot of trees there on the land that used to be fields.
5 acres of land cannot be developed on because it’s all peat moss and 3 of those acres are protected by something my grandfather put in place a long time ago, because it’s wooded land from trees my great great grandfather planted there back in like the 1920’s. So, that leaves the 5 acres with the house and pole barn. A total of 10 Acres.
With only 5 developable acres, I’m not too worried about farm land prices. The neighbors field to the north was put into protection several years ago and they planted trees and the neighbors fields to the east and west are separated by rather deep ditches. I’m not worried about it getting torn down and turned into farmable land, plus there is plenty of acreage in the area for sale.
OHSCrifle said:
I have nothing concrete to add, but it seems like there is a FMV for everything. Do you have access to the reverse mortgage paperwork?
I do not possess the paperwork, but could access it. My relatives have it and I just need to confirm that nobody else wants the property, before I try to pursue this.
Have you looked at what zillo thinks it is worth?
In reply to SyntheticBlinkerFluid :
You might be able to get the info from the town / city / county tax assessor's office. What is it you're looking for? Just the lienholder info, or payoff amounts etc?
In reply to dean1484 : I use Zillow to get a crude idea of value but it’s wildly inaccurate. Far better source is your local tax office. It’s public record and takes into consideration trusts, conditions, restrictions and actual market value.
In reply to frenchyd :
Up here tax values are way out of wack. I agree though that Zillow should not be considered the bench mark either.
Your best bet is to pursue a buy back from the mortgage holder through whomever in your family took out the loan. There may be provision in the contract for such a thing and it could be purchased back for the loan amount + a percentage. Otherwise you're just another prospective buyer to the mortgage lender and they're in the business to make as much money as possible, so you'll pay market value. That's not necessarily bad. Depending on what's happened to the value of the property during the 15 years, one approach may be cheaper than the other.
RossD
MegaDork
1/6/18 10:11 a.m.
Tax info is free and easy to access. I generally type into google the xounty name, state, and 'gis'. This leads to a map website run by the county or a 3rd party. Find the parcel and look up the tax info.
Find out what the close out on the mortgage is. Your Grandma should get a monthly statement from the mortgage company.
dean1484 said:
In reply to frenchyd :
Up here tax values are way out of wack. I agree though that Zillow should not be considered the bench mark either.
Property taxes should be between 1 & 2% of true market values. One exception is where extremely high value homes dominate a neighborhood.
The other exception is in poor areas. While the rich may pay well less than 1% when all in the same area
The poor may need to cough up 3 or even 4% for the most rudimentary services.
AngryCorvair said:
In reply to SyntheticBlinkerFluid :
You might be able to get the info from the town / city / county tax assessor's office. What is it you're looking for? Just the lienholder info, or payoff amounts etc?
I’m really just trying to find what is involved with buying the house back. I’m not too concerned with property value at this minute.
In reply to SyntheticBlinkerFluid :
The mortgage holder is probably going to want to sell it to you at something very close to market value, so going through local tax records and knowing the approximate property value as well as the amount of the mortgage should tell you what the bank will need to get out of the property, and what they are likely to try to get for the property. As a buyer, you want to pay as little as possible, so knowing those 2 numbers can be pretty helpful.
I don't know the answer, but from what little I know about RM, the bank should fully own the property now and will certainly sell it at FMV. The concern would be the contact they have with you grandma. It seems possible it would cancel their payments to her, or more likely that a sale is simply not allowed.
It would certainly be a weird situation if they did allow it. You own the property, but cannot move in (I am sure you don't want to) because of a contract with someone else. It would be a bit like the Hue Hefner situation (they were welling the mansion but he had to be allowed to stay there)..
I googled "buying a house with a reverse mortgage" and found this:
Buying a house with a reverse mortgage
Although the mechanics of paying off a reverse mortgage or purchasing a home with a reverse mortgage on it may entail some hoops to jump through, it's not that difficult a concept. Basically your first step is to contact the reverse mortgage company and determine what the payoff is for the mortgage. Once you pay that off the house goes back to your grandmother and she can sell it to you however she sees fit for whatever price she's willing to accept. In reality most reverse mortgage companies are not interested usually in being in the real estate business. They're nothing more than a loan company that wants their money back.
All this hand wringing over tax assessed values is essentially irrelevant as to issue off purchasing property encumbered by a reverse mortgage
A more significant question is how much longer can your grandmother live there. That would have a bearing on what the ultimate payoff might be if you wait much longer. Essentially the longer the reverse mortgage is in effect the greater the payoff balance.
aircooled said:
I don't know the answer, but from what little I know about RM, the bank should fully own the property now and will certainly sell it at FMV. The concern would be the contact they have with you grandma. It seems possible it would cancel their payments to her, or more likely that a sale is simply not allowed.
It would certainly be a weird situation if they did allow it. You own the property, but cannot move in (I am sure you don't want to) because of a contract with someone else. It would be a bit like the Hue Hefner situation (they were welling the mansion but he had to be allowed to stay there)..
Common misunderstanding about RM...grandma still owns it. You do not lose ownership of your property in a reverse mortgage. You can sell property subject to the lien of the RM...just like a conventional mortgage.
Ovid_and_Flem said:
Although the mechanics of paying off a reverse mortgage or purchasing a home with a reverse mortgage on it may entail some hoops to jump through, it's not that difficult a concept. Basically your first step is to contact the reverse mortgage company and determine what the payoff is for the mortgage. Once you pay that off the house goes back to your grandmother and she can sell it to you however she sees fit for whatever price she's willing to accept. In reality most reverse mortgage companies are not interested usually in being in the real estate business. They're nothing more than a loan company that wants their money back.
All this hand wringing over tax assessed values is essentially irrelevant as to issue off purchasing property encumbered by a reverse mortgage
A more significant question is how much longer can your grandmother live there. That would have a bearing on what the ultimate payoff might be if you wait much longer. Essentially the longer the reverse mortgage is in effect the greater the payoff balance.
Ok, this is what I was looking for. I’m going to have to figure out how this all works, because I’m going to have to apply for a mortgage just to make this happen. I don’t mind stopping the payments to my grandma, because I could financially take care of her. My relatives may not want that, but they also aren’t going to want the property when my grandma passes away.
