Posted: 5/10/2013 9:04:26 AM EDT
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a house that I am still paying a mortgage on? Is it legal? I haven't had any luck selling my old home, but I've got several people wanting me to owner finance. They are offering between 5-10% down and willing to do a ten year payment plan. I am leaning towards this, so that I van avoid the maintenance involved in keeping up an old house with renters in it. Posted Via AR15.Com Mobile |
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a house that I am still paying a mortgage on? Is it legal? I haven't had any luck selling my old home, but I've got several people wanting me to owner finance. They are offering between 5-10% down and willing to do a ten year payment plan. I am leaning towards this, so that I van avoid the maintenance involved in keeping up an old house with renters in it. Posted Via AR15.Com Mobile You still have to keep it insured and I would be asking for a large down payment and high interest rate of 8% Get an attorney and do a wrap around contract. In that contract you sell the property and "wrap around" the underlying loan with the sales document. |
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a house that I am still paying a mortgage on? Is it legal? I haven't had any luck selling my old home, but I've got several people wanting me to owner finance. They are offering between 5-10% down and willing to do a ten year payment plan. I am leaning towards this, so that I van avoid the maintenance involved in keeping up an old house with renters in it. Posted Via AR15.Com Mobile You still have to keep it insured and I would be asking for a large down payment and high interest rate of 8% Get an attorney and do a wrap around contract. In that contract you sell the property and "wrap around" the underlying loan with the sales document. Should any good attorney have the know how to write up a contract like this? What would a ballpark figure on this kind of work be? Posted Via AR15.Com Mobile |
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We considered it with our house we just sold, but only to investors. They would have put enough down to pay off our mortgage so we were the ONLY lien holder, and then paid the rest off in a very short period of time.
If you owe anything, your mortgage company usually has first rights should they ever default. If what is recovered only covers part of your mortgage you are on the hook for the rest from what I read. Either they owe you and only you, so you get everything including the house back if they default, or I would RUN from it. |
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a house that I am still paying a mortgage on? Is it legal? I haven't had any luck selling my old home, but I've got several people wanting me to owner finance. They are offering between 5-10% down and willing to do a ten year payment plan. I am leaning towards this, so that I van avoid the maintenance involved in keeping up an old house with renters in it. Posted Via AR15.Com Mobile You still have to keep it insured and I would be asking for a large down payment and high interest rate of 8% Get an attorney and do a wrap around contract. In that contract you sell the property and "wrap around" the underlying loan with the sales document. Should any good attorney have the know how to write up a contract like this? What would a ballpark figure on this kind of work be? Posted Via AR15.Com Mobile You will want an attorney that specializes in real estate. |
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If they can't qualify for a mortgage from a bank, why would you want to be their bank?
Are you going to pull credit for them? Are you going to verify employment? Are you going to do an analysis of their income to debt? Are you going to check their employers to see what prospects those companies have of remaining in business for the next 10 years? Are you going to be willing to make sure their check is on time for the next 120 months? What is your plan for when they call and say, "We have to skip paying this month because my car broke down and the baby needs new shoes?" or "I lost my job." Are you willing to execute the procedures necessary to evict if they default? Are you willing to put up with not being able to attempt to sell or rent the place for up to 12 months while there's deadbeats living there? Most banks that make mortgage loans sell the loan to some other financial institution, because servicing a loan sucks. Knowing this, are you still willing to get in that situation? |
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there is a reason they are seeking owner financing..... Possibly because banks are mostly scumbag thieves out to steal your money and regular folks are often honest? They are sort of kind of a little bit honest. When they say "my car broke down, so I don't have the money"...the car probably really did break, but they do not mention spending their tax refund on a trip to Florida, going out drinking every Saturday and buying a bag of weed that same week. When they say "I had to go school clothes shopping, so I don't have the money" they probably really did go school clothes shopping....but they fail to mention that their grandmother actualy paid for all the stuff, and they spent their money on a few tattoos. When they say "my dog got hit by a car, and I had to take him to the vet, so I don't have the money" the dog might have actualy gotten hit...but they don't tell you that they never really paid the vet, he is suing them and they spent the money on a shitty boat that does not run. Yup...real honest folk. They know that the bank does not give a shit about their sad lives....but with owner financing, they can get a little sympathy and have a good time on someone else's dime. |
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there is a reason they are seeking owner financing..... Possibly because banks are mostly scumbag thieves out to steal your money and regular folks are often honest? that's one possible scenario I suppose.....I have met some pretty shittty people and pretty honest Bankers..... |
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I built a new house, because interest rates were good and the price was right. I knew that we would probably have trouble making a sale on the old one, but I can float both mortgages, if need be. So now I'm in the position of maintaining two homes. I have three options that I can see.
1. Leave the house for sale and possibly make $20k, if I get my asking price. 2. Rent it out, which covers my mortgage and gives me a little income every month. This option also leaves me stuck with repairs, and possible shitty tenants. 3. Owner finance, which covers my mortgage, the home repairs and will net me double the profit, of a sale, over time. It will have the same risk of shitty tenants, but the bonus of having a large down payment, instead of just 1st and last months rent. Posted Via AR15.Com Mobile |
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I wonder if you have to do the 'depreciation' thing for owner financed sales. I suspect not. Renting it out makes that mandatory.
It can be a substantial hit at some point (usually when you ultimately sell). The big money in owner financing seems to be (from what I've read, I'm no expert) is in getting a good down payment and then keeping it if the buyers fail to keep their end of the contract, plus the higher returns than what you'd get out of a mutual fund or money market or whatever. The risk, of course, is that the house could be trashed if the buyers default and you have to foreclose. If you're not dependent on the income and can deal with a long period (a year or two) of not having the payments come in, it might be a good idea. If you are dependent on those payments to make the whole thing work, it's a very risky proposition. |
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Do it as a rent to own, with a < 2 year window. They get a letter from their mortgage company stating that they qualify as of a certain date. If someone ran into issues previously (bankruptcy, short sale, etc), there is a date when they become eligible for a mortgage again. They put down earnest money and sign a purchase agreement, just as if they were buying the place and closing on it next month. They pay you rent, and they get a credit toward down payment, usually a number close to what the principal of your mortgage payments are, but not necessarily. If they walk, back out, etc, you keep the earnest money. When the 2 year closing date rolls around, they have $12k or whatever toward the down payment, and the sale executes as normal. If they back out, you rented your house out for 2 years, and you're where you are now. |
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a house that I am still paying a mortgage on? Is it legal? I haven't had any luck selling my old home, but I've got several people wanting me to owner finance. They are offering between 5-10% down and willing to do a ten year payment plan. I am leaning towards this, so that I van avoid the maintenance involved in keeping up an old house with renters in it. Posted Via AR15.Com Mobile You still have to keep it insured and I would be asking for a large down payment and high interest rate of 8% Get an attorney and do a wrap around contract. In that contract you sell the property and "wrap around" the underlying loan with the sales document. For sure get a good lawyer to draw it all up. And I'd want a larger down payment. |
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I used to do owner contracts quite a bit when I was flipping houses.
The way to arrange this is to hire a title company to service the contract, the same sort of company you hire for title insurance whenever you sell a house can handle this without any trouble. The buyer sends checks to the title company, they fund the escrow account, the insurance, the taxes, and you. If/when the buyer defaults it's the title company that forecloses, you don't have to be the guy who worries about that stuff. The fees they charge for that are quite reasonable, and people who want owner financing are generally happy to pay the fees. My rule was always 20% down and a high enough interest rate to provide an incentive for the buyer to refinance conventional as soon as they could, but I still have a contract running at double-digit rates that has been no trouble at all, for decades. I've never had a buyer default, in over a dozen trials. Your bank may object, may not. Contracts can be written creatively. |