I want to buy a house the owner has a second mortgage on it?

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You should get a contract of sale and a letter from your Bank for the balance before he goes bankrupt .

And you should get a report for the title to be free and clear of any judgments or liens.

I want to buy a house the owner has a second mortgage on it?

You have told us two different things.

"They told us we will only owe the balance of the loan." which implies if the loan is $100K, you are buying the house for $100K.

"They told us that it won't affect what we buy the home for (they verbally quoted a price). " Implies that they are selling you the house for $120K and assuming the $100K loan--and giving them the remaining $20K as cash. They will use the cash to pay off the second mortgage at closing. (How much of the downpayment is coming from your rent? Any?)

I want to buy a house the owner has a second mortgage on it?

Get a Realtor, they aren't that expensive and there fee can be added to the mortgage. i wouldn't buy it if it is thru a friend and u take over payments. when u get your mortgage the funds u send the owner will automatically be applied to the mortgages first and second ones. I recommend talking to your mortgage broker.

I want to buy a house the owner has a second mortgage on it?

Do you know if the lien is recorded against the property you intend to buy? It's not a big deal even if it is because when you put your loan together the lender will require a title search to be done and all liens will be cleared from that property either at closing or prior to in order for your lender to be in first position. The new lender will also be diligent in ascertaining if there are indeed tax liens. The lender you go with is not going to put themselves in a position where their collateral is at risk.

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I want to buy a house the owner has a second mortgage on it?

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