Question by great_and_mighty_adam_levine: Is it possible to buy my own mortgage at a discount?
I have one of those loans that banks don’t want anymore. It’s a 5-year interest-only ARM. However, I bought this on purpose, and have the ability to pay.
My mortgage company just sold my mortgage (not unusual). However, considering the timing and the type of loan it is, I am assuming they sold it at a hefty discount. I’m paying under 4% interest-only payments for five years (I paid a lot of points), and after those five years are up, I have adequate credit and equity to refinance, or I might just have the cash. So, the new mortgage lender can count on under 4% interest for less than 3 years.
My question is, if banks are willing to sell my mortgage at a discount, is there any way for me to buy it? Would it help if I thrashed my credit first?
It seems my question needs clarification.
I would be a fool to payoff this mortgage now at full price. I’m paying under 4%. I calculated the points I paid as yielding a rate of return of 12%, but if I don’t keep the loan a full 5 years, the points were a major rip.
However, if I could buy my mortgage for significantly less than my payoff balance, I would consider it. In today’s market, my mortgage would be sold to another mortgage lender for a BIG discount, so why not sell it to me for a (presumably smaller) discount?
Answer by Pojo
You have already done a couple of bad things, IMHO, by paying points on a interest only loan why futher the irresponsibiltiy by trashing your credit.
Add your own answer in the comments!
no i think its not possible
Yes, you can get it as the lender might have some soft corner for you. Checkout http://mortgage.creditmortgagepro.com for some useful info and tips on the matter. Good luck!
Why would you want to buy it, you can borrow money for less than 4%?
Keep the mortgage, take your money and invest it
It might be possible but I’m betting that the seller of your mortgage discounted it to the buyer due to the points you paid. I doubt that they would be willing to sell it at a discount, I guess let you pay it off at a discount is the proper way of looking at it. Trashing your credit is the absolute wrong thing to do, it won’t help you, it’s a loan with a term and probably not callable so don’t do that. Since you ate the points and are paying what you are I think you should live with it.