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lisascherzer
Joined: 04 Jan 2008
Posts: 755
1.11 Dollars($)
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Lease to purchase or a land contract would be options to for the buyer to purchase this home.
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Lisa Scherzer
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santos
Guest
0.10 Dollars($)
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Post subject: owner financing |
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| If you hold a first mortgage on a property can you still owner finance for 100% of the first mortgage as a second to a propective buyer???I.E. be the middle man for the bank |
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Samantha
Community Mentor
Joined: 16 Sep 2005
Posts: 1606
Location: MASSACHUSETTS
150.38 Dollars($)
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Post subject: RE: owner financing as second lien |
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Santos,
What I can understand from your query is,
You have a home with a mortgage on it and wish to sell it off. The buyer will not assume the loan but consider it as owner financing - that is, you will be paying for the loan with the funds paid by him every month as a part of the owner financing deal. Thus, the owner financing will act as a second lien on your property.
However, I doubt whether your lender will allow for it. This is because when you sell off the home, either you are expected to pay off the loan or else let the buyer assume the loan with the approval of the lender. And, it is better not to hide the owner financing deal, as the lender can charge you a penalty if he comes to know of it because he has invested into the property and he hasn't received the entire payment yet.
Moreover, if your loan contract has a due on sale clause, then the lender might immediately ask for the entire balance once you sell off the property.
Please let me know if that's what you have asked for.
May God bless you.
Samantha
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livinginnky
Moderator
Joined: 08 Sep 2007
Posts: 637
29.96 Dollars($)
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Hello everyone,
There is a simple solution to this problem. The easiest way to accomplish this would be with a rent to buy. The buyer would simply sign a lease just like a standard rental agreement would look. In addition you would attach an addendum which states that on such and such a date and for this much money A. will buy property from B. That way everyone is protected and nobody runs the risk of losing seriously. There are obviously still risks but this way the original lender can't call a "due on sale" clause. And the new buyer has a legitimate stake in the purchase (if he/she can qualify through a lender). You can still put money down or structure the purchase how you see fit.
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Eric Matthews
Mortgage Refinance and Home Loan Guide |
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Samantha
Community Mentor
Joined: 16 Sep 2005
Posts: 1606
Location: MASSACHUSETTS
150.38 Dollars($)
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Post subject: RE: owner financing as second lien or simple rent to buy |
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Thanks Eric. It is indeed a good way to avoid risks on account of the due and sale clause. Instead of having a second lien, it is better to go by this method. Thre best thing is, it offer protection to all parties involved in the transaction.
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livinginnky
Moderator
Joined: 08 Sep 2007
Posts: 637
29.96 Dollars($)
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I should add that local laws will have something to do with the determined agreements as well. Rent to buy as I have shown is not legal everywhere, just like lease options and land contracts. Different local laws can have an effect on what financial tools you use. Just wanted to throw that in, but not wanting to complicate the matter. Oops, Looks like I just did. So with that said it is always a good idea to consult with a reputable local attorney.
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Eric Matthews
Mortgage Refinance and Home Loan Guide |
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confused
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Post subject: owner financing |
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| I am buying some acreage from the seller and he is financing. Can he ask for payments to begin before we get the land surveyed and have the closing? We signed the purchase contract in November and we were supposed to have the closing in mid December but we could not because the surveyor could not get to us until this February. Now the seller says we forfeited because we did not make a payment in January and another payment is due at the end of this week. The purchase agreement says that interest will accrue starting December 15 and payment begins January 15 and on the 15th of each month after that. Are we supposed to have made payments in Jan. and Feb. even though we have not had a closing? |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 819
Location: OHIO
211.09 Dollars($)
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Post subject: RE: seller financing issues |
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Hi Guest,
Welcome to our community forums.
I think everything should go by the contract. If your contract says payment should begin in January, it should start then only. But does your contract say anything about an upfront payment? may be the seller is asking for an upfront payment in the form of down payment.
However, if the closing is not yet done, then the monthly payments should not start. The seller should have amended the contract then. He can at least ask for the down payment but not the monthly payments. I think you should have a straight talk with him and if he's not willing to listen simply stay out of this contract, if possible or else seek legal advice from an attorney.
Regards,
Jessica.
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GUEST
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Post subject: SELLER FINANCING |
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| I HAVE A QUESTION. IM NEW TO SELER FINANCING AND I HAVE SOMEONE WHO'S INTERESTED IN DOING SELLER FINANCING WITH ME B/C IM NEW TO THE COUNTRY AND DONT HAVE ALOT OF CREDIT. I KNOW THAT THE SELLER OWES MORE ON THE HOUSE THAN WHAT THEY WANT TO SELL IT TO ME FOR. IT SOUNDS LIKE A GREAT DEAL. BUT IM WORRIED AND WONDERING HOW CAN I BE COVERED TO MAKE SURE I OWN THE HOME WITH A CLEAR TITLE OR SOME KIND OF INSURANCE? SO I KNOW NO ONE CAN TAKE THE HOME FROM ME? |
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helping_user
Joined: 31 Mar 2006
Posts: 815
Location: Hawaii
155.59 Dollars($)
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madamx
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Post subject: legalities |
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| Who would you go to that would handle paperwork to make an owner finance deal legal and on paper? |
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Niicss
Joined: 03 Oct 2005
Posts: 3237
Location: New Jersey
510.78 Dollars($)
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Welcome madamx,
I feel you should contact an attorney. He will handle the paperworks to make the deal legal.
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Good is the Enemy of Great. |
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help
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Post subject: only 20 years left on the loan |
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| he said he would owner finance for the 20 years he has left on the house what happen after he pay it off do the deed go in my name |
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larry
Joined: 27 Jun 2007
Posts: 3328
474.61 Dollars($)
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Hi Guest.
Are you the owner of the property? If so are you ready for the owner financing? Now the buyer will get the property on his name after paying off the loan but if he cannot pay the loan off then you can even foreclose.
BTW is the buyer want to assume the loan? You need shed a bit more light on this so that we can help you better.
Best of luck,
Larry |
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Donna Andres
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Post subject: Seller Financing |
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A note broker presented a contract to my seller. He is a bad scenario? The owner/seller has a first mortgage on the property for $110,000. We create a promissory note for the sale price of $131,000.00 with a 360/month 7.5% interest rage. The promissory note is never registered or recorded but the tenants/borrowers have occupied the property on a lease/purchase contract for 24 months. The seller gives back 3% for down payment. The unrecorded promissory note and seller financing contract were negotiated with a note buyer and he offers $80,000 for the promissory note. Who pays off the first lien or is it really going to be paid off by the new buyers. Does the tenant/borrower on the promissory note have to be present for the transaction. Does the seller/owner financing have to notify the lender that he sold a promissory note? Any comments.
Thanks
Donna |
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