Expert: Dick Dennis - 1/4/2007

Question
We planned on using all of the money from the sell of the 2 lot properties to pay the mortgage. The sell of both lots should pretty much pay it off at that point. Do you think they will allow it if the monies are paid directly to them towards our mortgage?
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The text above is a follow-up to ...

-----Question-----
My husband and I live in PA,we are considering for purchase a 3 bedroom, 1 bath home with 4.8 acres of land. My question is, can we sale 2 lots equaling an acre if we still owe the bank on our mortgage? Being that the frontal property of the 4.8 acres is prime location for new homes going up in the area, the selling of the 2 lots would enable us to pay off the mortgage. we would like to then borrow another loan from the same lender to build a new home on the remaining property and rent out the original home to help pay off the new mortgage. Would our lender be able to work with us on this?
-----Answer-----
Good thinking, Mary. However, your lender will frown on your "chopping off" some of their security by selling off that land you're thinking of doing. In fact, it is grounds for suit.

Chances are that the bank will require you to pay them that percentage of the mortgage that equals the sale of the property. Since you'd be selling off approximately 20% of their security, they would want to be paid for 20% of the mortgage.

In any case, I strongly suggest you engage a REAL ESTATE attorney to guide you through this maneuver so that you don't step on any legal toes. Each state, county and city have their own rules for doing what you are planning.

I do wish you well.

Dick Dennis          dixiedee13@aol.com

Answer
You are virtually guaranteed. Merely approach the supervisor of the mortgage maintenance department of the bank who collects your payments and tell them what you are trying to do. Expect them to protect their interests. And you should have someone to protect your interests, too. That's why I suggested you consult with a REAL ESTATE attorney. Don't chince on this. You want it done right. See that attorney.

Dick Dennis