Hi all, can anyone explain how to buy a trespaso casa. I get the fact that the current owner usually can't pay anymore, so you pay them what they have paid, ie 300,000mxn then you take over the repayments. However, do you transfer the credit into your name, ie. go to the bbank and get a mortgage for the remaining amount on the house, or well how does it work. Sorry if this doesn't make sense!!!!
Traspasos are a dangerous business, you need to really know what you are doing. Basically you are assuming someone else's mortgage, and as I understand it, that's legal. But is it legal if you are a foreigner? Probably not. Traspaso sellers always want the money that they've paid, but never seem to know how much principal is left on their loans (which is critical). And they never seem to know the terms of their loan. Ask them what the interest rate is and most of them won't know what you are talking about. I would get good legal advice before entertaining the idea of buying a traspaso.
Rivergirl is 100% correct. There is a possible danger if the former owner was to die before you pay it off. This can be avoided with an assignment of rights at the time of purchase. Her important comment is to seek competent legal advice from a local attorney. As an example of another point RG made, and I will expand on it a bit, to explain how crazy things can be is as follows with the numbers being in US Dollars: Assume someone pays $100,000 for a property with a $5,000 down payment, and a 20 year mortgage loan of $95,000 with a monthly payment of $750 per month. I do not mention an interest rate because the seller will have no clue. 5 years later they want to sell. The price you will (more often than not) be quoted is that you pay trespaso of $50,000 and $750 per month. Now this can be a good deal or a bad deal and how they arrive at this number ($5,000 + 60 x $750) has nothing really to do with the market value of the property or the loan balance. The trespaso is pretty much "give me back all my money and I have lived here essentially for free." The other thing is weird, with which I am sure that RG will agree, is that it can be cheaper to pay the remaining payments month by month than it is to pay it off in a lump sum. So let's assume that you sell a home in the US and fall in love with a property here where the seller is seeking a trespaso. The sum of the remaining payments, let's use the above example, which would be 15 years, or 180 payments, x $750 would be $135,000. If you ask for a payoff figure from the lender, it could very well be over $135,000. And keep in mind that the 180 payments INCLUDE interest. I think I know what I am doing but have no idea how this works. I was looking at a condo (here called an apt) in Los Picos basically in the Walmart area. The seller was the sister of a broker that I know. This was the case with this property although it only had about 3 years worth of payments left, and the price was in the $30's but if I paid it off it would have been about $3,000 more than just paying it month by month. How did I do Kimmy?
TJ - You seems to get it better than I do. I have not seriously considered a traspaso simply because when the seller has no idea what the interest rate is I "go American" and get completely impatient with the whole thing. It makes me nuts that people are so quick to take on debt and yet have no clue what their loan terms actually mean.
Hi, thanks guys, it's slowly shedding light on the whole thing. T.J, juan from sandwich cafe is my wifes cousin and I am always in there on Sundays, maybe I can sit down with you sometime and talk about it as you seem very informed. As I am married to a mexican girl, we would be doing it all through her name. Thanks a lot for your help.
RiverGirl - It is the typical low income American mentality of "How much down and how much a month?" It can work for some but with the phantom interest rates, that are already high here anyway, you can end up paying a lot more over the life of the loan, than prudent investing would otherwise dictate. RiverGirl & matkirk - We can all do the math but at a $50,000, 20 year loan, the difference between a 10% and a 12% interest rate is $68 per month and more than $16,000 over the term of the loan. matkirk - i will take you up on your Sunday offer but I am leaving tomorrow for a couple of weeks. Catch you when I get back. But I am going down there mid afternoon for some cold ones.
