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buying out a co-owned property

about 6 years ago my wife bought a duplex with friends. the property is co-owned, not a TIC. The loan consisted of a 10 year interest only period so no one has any equity in the place at this point and it is underwater. our best estimate is that it would go for 700k at the most right now and was purchased for 800k. we would like to get the whole building from them and believe that, due to their circumstances, they might be willing to entertain a buy out. my question is how would that work? if we offer them, say, $10,000 to walk away how can we get them free of the loan in the process? i'm sure there are more details that are needed to answer this and i'm no expert and will answer any questions that help. I'm guessing that we will have to talk it over with a real estate attorney to make sure that our proposal is rock solid before we bring it to them but i'm hoping to get some initial direction here. thanks in advance.
  • November 12 2012 - US
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Answers (1)

You may qualify for a harp loan, meaning it can be refinanced even though it has negative equity. The reason it could work is the loan was before 2009, the loan is interest only and you would be switching to a fixed rate fully amortizing program. You would need to show you have Mortgage Insurance on the loan then the best bet would be to refinance through the existing lender who services the loan.
  • November 13 2012
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