ANSWERS: 2
  • Let's put this into numbers and see if it makes sense. #1 Your house is worth $100K and paid for. Sam's house is worth $250K, but he owes $100K on it, so equity is $150K. You would have to give Sam your house plus $50K if he swaps with you. #2 Your house is worth $100K again, but now Sam's house is worth $125K and he owes $75K, so equity is only $50K. Sam would have to pay you $50K plus his house. hope this helps. PS the note, more than likely, would have to be refi'd by you!The transfer of the home would probably cause the bank to 'call' the note.
  • Having a 'note' on a property means another person has a financial interest ( or mortgage ) in that property, registered against the current owner. The property cannot be sold or traded without honoring the note first, so if the property was purchased, the deal must include clearing the title for the next owner, in other words paying the note off before the sale proceeds. In a trade, since no money changes hands, the new owner could be liable for the value of the note above and beyond the value of the trade. Most note holders would demand to clear you as the new note holder before allowing the trade or sale to proceed. In real estate, the note is the same as the mortgage, and has the legal right to be paid off first, by the current owner.

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