By Mike Lautensack

Assume the Mortgage

In this scenario essentially you would go up and you would offer to assume the existing mortgage. You would say, "Mr. Smith, I will take over your mortgage. I will make the payments going forward. You would deed the house to me and I will make the mortgage payments - but I will not pay off the mortgage."

Sellers will do this all the time, again if they're properly motivated. If they're not motivated and they're thinking about selling six months down the road they're not going to entertain these types of no equity offers. You've got to get the right sellers.

You could take over that mortgage, have the house deeded over to you, and you would then basically own the property and you would continue to make the mortgage payment. You would not assume the mortgage; you would just make the payments. The mortgage remains in the seller's name.

A Few Things to Be Aware Of

At that point a couple of things might happen down the road. You might eventually sell the property and you'd pay off the mortgage. The mortgage company may get wind that you've taken it over through whatever mechanism and they're probably going to send some threatening letters and play hard ball a little bit with you.

In the end they're probably not going to do very much and there is not much they can do. They could foreclose on the house, but what bank right now wants to foreclose on a house that the payments are being made? Already they have so many foreclosures they don't know what to do. They are not going to foreclose on a house where the payments are getting made.

That is the third way of creating an offer on a house that essentially has no equity. You take over the payments. Did you put any money out of your pocket? None. No money down assuming the house is accurate and it's worth $130,000 and you've created $30,000 of equity for yourself.

You did not have to go to a bank and apply for a loan. You did not have to put your personal credit at stake. You did not have to wait two or three months for the mortgage company to close your loan.

Again, these types of offers are not going to be in the MLS. That's why I really preach and teach that ultimately when you become more advanced in real estate you've got to go out and meet with sellers, interact with them and develop rapport and make offers yourself. You can't do it through realtors. You can't do it through computer websites. All these things are not where the deals are.