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carry back loans

Posted on: 18th Jan, 2007 12:03 pm
We live in a high cost area. Purchasing a home is prohibitive for most ($60000 annual income is considered poverty level!). I am currently renting a nice home w/ my 82 year old mother. The owners want to sell, we would like to buy. I am trying to find a way... The house is appraised at about $825000. There are numerous fix up costs for the owner prior to putting it on the market (paint, floors, roof...). We want to make an offer that would basically deduct the fix up costs from the price (est. $75000); put a large downpayment ($250000 - $300,000); obtain a traditional fixed home mortgage of about $300,000); and ask the sellers to carry back the remaining $200000. Essentially our plan is to live in the house and sell it when my mom passes. Is it a realistic offer to the seller to request that the portion they carry be paid to them at the time we sell the house in the future or does a carry back require monthly payments (Our goal is to keep our monthly payment at about $1800)? Any conversation about carry back loans by the seller would be appreciated. Thanks!
Hi,
"Is it a realistic offer to the seller to request that the portion they carry be paid to them at the time we sell the house in the future or does a carry back require monthly payments"
The seller would require you to make monthly payments towards repayment of the amount. But do not think he would agree to wait for the amount to be repaid to him when you sell the house in future.

Jamieson
Posted on: 18th Jan, 2007 12:33 pm
hi gillette,

welcome to the forum.

your offer doesn't seem to be unrealistic; the only thing is that the seller won't possible wait for the time when you sell your home. there is a first mortgage involved a fixed rate loan on which you will have to make monthly payments and hence selling the property would mean paying off the loan. or else, you need to look out for a buyer who can assume your first mortgage. therefore there isn't any assurance that you can sell in near future. so, the seller won't agree as far as i believe.

next, a typical seller carry back financing would require you to make monthly on the loan at a specific interest rate, generally in between 8-12% and then pay off the seller carry back portion of the loan within a period of 5-7 years.

probably, you will have to inform the lender offering you the first loan. he may be interested to review the terms and conditions of the agreement you have signed with the seller.

the lender will take into account the monthly payment you will make on the seller carry back and then determine whether you will qualify for such a loan. the seller carry back will be considered as second mortgage held against your home.

hope you have benefited from this information.

my best wishes for your new home.

god bless you.

samantha
Posted on: 18th Jan, 2007 10:31 pm
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