Home arrow Mortgage Forums arrow Forums: Learn from other's experiences arrow

interest rates

Author Message
big daddy con

Guest







Post Posted: Mon Oct 19, 2009 10:32 pm    Post subject: interest rates
Like 0
Dislike 0

Can I charge 0 percent interest for a owner financed mortgage? The idea is that I can charge a higher price 80000 dollars to max the tax credit. normal selling price would be 46000. Any thoughts or insights.
_________________
Need help choosing the right loan? Get free consultation from community lenders/consultant
Icon Mini Profile Niicss
Niicss




Joined: 03 Oct 2005

Posts: 4770
Location: New Jersey
499.28 Dollars($)
Post Posted: Tue Oct 20, 2009 1:37 am    Post subject:
Like 0
Dislike 0

In an owner financing, there would be an agreement between you and the buyer. You can charge the interest rate as mentioned in that agreement.
_________________
Good is the Enemy of Great.
Icon Mini Profile gmakerley
gmakerley
Community Mentor
Community Mentor

best lender badge

Joined: 09 Nov 2007

Posts: 12346
Location: bloomfield, ct
53.01 Dollars($)
Post Posted: Tue Oct 20, 2009 10:43 am    Post subject:
Like 0
Dislike 0

do what you wish to do - the marketplace sets values on homes, so you won't have any governmental agencies coming at you or your buyer questioning the price. just be sure you have all your i's dotted and t's crossed.
_________________
George M. Akerley
Independent Contractor - Mortgage Consultant
Word of Excellence Editing/Writing/Proofreading
860-221-5044
Icon Mini Profile thewretched02





Joined: 23 Jun 2009

Posts: 115

23.92 Dollars($)
Post Posted: Wed Oct 21, 2009 2:53 pm    Post subject:
Like 0
Dislike 0

If the buyer will agree to the infalted price then I don't see why not.
_________________
Home loan Mortgage refinance information
USA Debt Settlement and Consolidation - You may qualify for a free quote
Mortgage and home loan refinancing resources
Icon Mini Profile thewretched022





Joined: 21 Oct 2009

Posts: 18

3.29 Dollars($)
Post Posted: Wed Oct 21, 2009 6:38 pm    Post subject:
Like 0
Dislike 0

I'm not sure I get the point of this - increase the price to get a tax break?
_________________
the Debt Consolidation Network - find what you need
Looking to refinance - see what your options are
Online loans portal
Icon Mini Profile jveenstra
jveenstra
Community Expert
Community Expert

best lender badge

Joined: 10 Nov 2008

Posts: 1256
Location: River Edge, New Jersey
264.15 Dollars($)
Post Posted: Thu Oct 22, 2009 1:27 pm    Post subject: Purchase
Like 0
Dislike 0

Interesting game plan.

If someone had a $46,000 mortgage at 6%, just for discussion sake, the monthly principal and interest payment would be $275.
If that same person had a 30 year mortgage at 0% interest rate for $80,000, the monthly PRINCIPAL payment would be $222.

The only glitch I see is that the federal government has a minimum interest rate requirement. That is probably around 4% give or take a little. They do not say you can not charge a lesser interest rate. They do say that you must report note interest income based on the required minimum rate on the date the mortgage was started. That means that even you are are collecting zero interest, the federal tax regulations require you to pay taxes as if you were earning interest at 4%.

Probabaly not a show stopper and I have absolutley no idea how the government would find out.
I have no idea what state laws are i this regard.

_________________
John Veenstra, Sr Mortgage Consultant
Approved Funding Corp
Licensed NJ NY CT PA
201-833-0123x278
Icon Mini Profile mrripper





Joined: 22 Oct 2009

Posts: 12

2.65 Dollars($)
Post Posted: Thu Oct 22, 2009 6:23 pm    Post subject:
Like 0
Dislike 0

Wouldn't the interest on a 46K mortgage over 30 years wind up to more than 80K?
_________________
Instant insurance Quote and info
Free Debt consolidation loan quotes
Avoid unnecessary taxes with a structured settlement
Icon Mini Profile eric1
eric1
Community Expert
Community Expert

best lender badge

Joined: 04 Jan 2009

Posts: 1511

226.89 Dollars($)
Post Posted: Thu Oct 22, 2009 9:41 pm    Post subject:
Like 0
Dislike 0

Yes over 30 years at a rate of 6%, you would pay a total of $99k in payments.

I am not sure that I like this method for you for a couple of reasons..
1. There is absolutely NO incentive for the buyer to pay you off sooner.
2. It will take 30 years for you to get paid.


My recommendation is to do this but based upon a 15 yr amortization and not 30 years. Yes his/her payments would be higher but you can show them how much they will save. There are two benefits for you...
1. You get paid faster
2. If they stop making payments a coupld of years from now, you can foreclose, take the home back and potentially sell for an additional profit.

_________________
Eric JFree Rate Quote, Stated Income Loans
FHA RATE QUOTE
Mortgage Rate Quote
Icon Mini Profile gmakerley
gmakerley
Community Mentor
Community Mentor

best lender badge

Joined: 09 Nov 2007

Posts: 12346
Location: bloomfield, ct
53.01 Dollars($)
Post Posted: Sat Oct 24, 2009 6:07 am    Post subject:
Like 0
Dislike 0

john, i am still quite skeptical about this minimum interest rate. i don't remember the other discussion (thread) on which we debated the topic, but your 4%, for example, would prevent lenders from basing loans with a nominal charge added to the fed funds rate. and by that i mean institutional lenders.
_________________
George M. Akerley
Independent Contractor - Mortgage Consultant
Word of Excellence Editing/Writing/Proofreading
860-221-5044
Quick Reply
Your Name
Subject
Image Verification


Can't read the image? click here to refresh
Message body

All times are GMT - 7 Hours
Page 1 of 1

 
Highlights
Bookmark this page
Share |

Helpful References
Mortgage Guide
Mortgage Terms
Mortgage News
Book Center
Shop and Compare lenders
30 Yr. Fixed Vs. 5/1 ARM


Calculators     [View all]
Are you eligible for loan?
How much you can afford?
Calculate monthly payment
Calculate APR


Financial Tools
Credit Repair Tool New
Mortgage Planner
Simple Budgeting Tool


Our Community
MortgageFit Blog
Community Professionals
Community Rewards
Introduce yourself
Website tools


Community Rewards
Five simple ways to earn money with the Mortgage Community.

MortgageFit on Twitter

Followers (265)








Community Chat

We have chosen to apply the Creative Commons Attribution License to all works we publish. This work is licensed under cc by 2.0
Page loaded in 21.114 seconds.