I want to buy a house the owner has a second mortgage on it?
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You should have a rent to own contract with your landlord. If you simply have a residential lease with no stipulation about buying the house then you are a renter and nothing more.
If you don't have anything in writing stating that you will buy the house for "the balance of the loan" then you do not have any price negotiated. You need it in writing that you will be purchasing the house for the balance of XXX loan at XXX bank.
You are correct however, that if they have used the property to secure another loan then if they sell the house to you the second loan will become due in full. If they don't have the money to pay it then they won't be able to sell the house.
I want to buy a house the owner has a second mortgage on it?Red flags. And I'll try not to overcomplicate this, but it is a bit complex.
It really sounds like you do not have a contract here, since you were verbally quoted a price. If you don't have a contract or a written purchase price, get one. Today.
The owners can sell the house to you at the "verbal price" if it enough to cover what is owed on the loans, or they come up with some additional monies to pay the balance.
When you buy the home, the lender will have to be paid to have their lien removed (a lien is basically a monetary interest in real property). Once you have clear title, whatever else this owner did or didn't do will not effect you. Be sure to use a title and escrow company to help with the closing. The title company will do a search to check for any liens or judgments that "cloud" the property, which will have to be resolved by the owner before you take title.
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