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Is there any programs (banks) financing a loan when 10% of the sale is carried by the seller? Purchase price is 1,000,000 & I am putting down 10%. I have an excellent Credit.

smithsussane · Posted: Fri Nov 21, 2008 9:36 pm Post subject:

Hi Ray!

Welcome to forums!

The seller can carry back a second loan on the property. However, in this case, the buyer would have to get a traditional first loan from a lending institution. The Seller would carry a smaller second loan. It is good to know that you have an excellent credit but as you will be paying only 10% down payment, the lender may ask you to do a PMI. But it is always better to inform the lender that the seller is carrying a smaller mortgage.

This community also has a large number of lenders. You can even consult them and seek a no obligation free mortgage consultation. as well.

Feel free to ask if you have further queries.

Sussane

steve2 · Posted: Wed Nov 26, 2008 1:21 pm Post subject:

Ray,

It is quite common for lenders to restrict seller financing on any portion of the sales price, particularly on larger loan amounts. Often, when you get into the $1 million price range, you will be required to have a combined loan to value of no more than x (that x could be 75%, 80%, 85%, etc.). Whatever seller held financing is put together will count towards that total loan to value ratio.

If they are acceptable to the lender of your primary financing, there are usually minimum terms for the seller financing that are required by the primary lender in order to approve it. For instance, the lender may say that they will allow seller subordinate financing, but it must be a fixed rate, it can not have a balloon payment, and it can not have a pre-payment penalty.

On a practical note, it is almost always a bad idea to enter into a lender borrower relationship with the seller of the property. More of these deals go wrong than ones that go right.

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Seller carry back