OfflineHi Folks
I just had a question regarding the seller financing. In Deans book “Be a Real Estate Millionaire” I read about seller financing and thought this might be something that could work out for me since I live near a small community of retired folks. Now my question is, Lets say I find a house that is for sale for X reason. The owner is free and clear he/she just wants to sell the house. If he/she agrees to carrying a first mortgage on the property would he/she need to be qualified for that loan on the house even if it is there own house? Would the bank say; “Hey they are pretty old and retired and there retirement found wouldn’t cover the payments of a new loan” How exactly would this work out for the bank and why would they approve it.
If anyone has done a transaction like this I would love to hear about your expierence. Also any input is welcome.
Thank You
When the seller is financing the property for you THEY are the bank, so you are paying the payments with interest to THEM. They are free and clear so a bank doesn't get involved at all. I am not sure if this answers your question I was a little confused by it.
Cathyb
Cathy B
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http://www.deangraziosi.com/real-estate-forums/investing-journals/44397/...
Hi Cathy
I think it does, I was actually thinking that the owner of the house goes out and takes a loan on the house so they can have all that cash upfront and then I end up paying for the loan. But this does make alot more sense now. I was looking at it all wrong.
One of the reasons for owner financing is to skip the bank route and deal with owners only. Depending on the house, price and the sellers situation will determine how much of a down payment you will need. Most owner financing will go for 1 to 5 years with a balloon at the end. Interest rates will vary between 5 and 8%. This gives you time to get you own affairs in line when it comes time to go to the bank for your ballon payment. You can get very creative as to how you structure your deal making it a win win for both parties involved...Jan
if you get the seller to finance your mortgage the bank is not involved unless the seller is only financing a portion, like your down payment, in any case your buying the house from them their credit or qualification has nothing to do with it, you are applying for the loan so your credit is what matters.
has a mortgage, it is called a wrap around mortgage. There are a couple of threads on wrap around mortgages here: http://www.deangraziosi.com/real-estate-forums/financing-and-credit/4213...
Sam and Cathy or correct, seller financing is usually if the property is owned outright free and clear.