i have friends that r goin to be rentin our house out and r want to make the payments for us to build their credit up. how do I go about letting them make the payments for us and it not comin out of our account? by ilovem_622_791 from Gatesville, Texas. Mar 17th 2013
I have a suggestion that may be of interest. Have you considered doing a wrap around mortgage? This is done by visiting a title company or real estate attorney and having them write up a new promissory note and mortgage for the individual(s) that will be renting your home. It's kinda like a rent to own scenario with a mortgage. What happens is you write a mortgage for more than what you owe to your bank. You then wrap that mortgage around your current mortgage. For example: You owe $100K on your loan, you then write a mortgage for $125K or whatever you want to write the loan for. then you can have the title company or attorney firm receive the payments for a small monthly fee then send the difference to your mortgage holder. You can ask the title company or attorney firms to submit the loan docs to all three credit bureaus and have them indicate that the loan is being paid as agreed to the credit bureaus each month. This program is a very creative way to help both you and your tenants and I would suggest you speak to a real estate attorney for clarification before setting this program up. Anyway, I hope you the best and good luck!Sean
I think you should set that up through a contract collection account, or they can save the cancelled checks and it they went to get home financing at some point, the lender can get a credit supplement for the rental payments...it will not be reported to the bureaus that way, but the renters can have that manually added to their credit report later....just a thought for you...
If they make your payments it won't do anything to their scores. Lorne has the right idea. Have them make payments to a 3rd party like a management co. There will be an expense for this that would need to be paid so they will need to be aware of that.
Lorne and Charlie have given solid advice
As a one loan private party, you can not report those payments to any credit bureau, therefore there is no "credit building" in any official sense.
Programs that allow you to add nontraditional trade lines like FHA or HUD 184K are a good way to go, but be careful. Lender overlays may eliminate this option in the future and the last thing you want to do is trust that a payment is being made and it's not.
A wrap-around mortgage will not be reported to the bureaus. Lorne's process may be of help, but is not a sure thing. Their best effort is to work on their other credit.
Try the wrap around mortgage that Sean suggested, that is how I would have it set it up. Just keep in mind that if they dont pay or pay late it will effect you and your credit score.
A Wrap-Around mortgage is also referred to as a Land Contract, depending on what part of the country you're from.
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