Seller's financing

[Bucky41]

What is the name of your state (only U.S. law)? New York

Hello again. Need some feedback on the following - the buyers who are interested in purchasing my home are having difficulty coming up with the downpayment. Long story short...I have to sell as part of a divorce (posted about this previously) and they want to buy house to rent out (investment). They need to have 25% as downpayment (this is what they've told me) as they don't plan to live in the property.

They initially asked about sellers concessions however have since been informed by their mortgage broker that they would have to live in the property. They don't plan to do this and do not want to lie just to get the mortgage. Now they've asked about sellers financing and I've done some research but think maybe I'm getting it wrong. Please correct me...I would continue to hold the title and would have to depend on them to pay the mortgage. If they don't pay, I could forclose on the property (take it back) since I hold the title. I also read something about them simply paying the mortgage that is on the property currently (not sure about that). Would the entire sale price have to be factored in?? It seems they want to somehow use the sellers financing for the downpayment as they've been pre-qualified for a mortgage. I'm so confused...

Not sure if you need this info, but I have a SONYMA mortgage (5.25% interest) and am close to losing the house. Have had to borrow to pay mortgage recently and just want it sold and out of my hair.

Is this an absolutely HORRIBLE idea which will surely jump up and bite me in the ****? Not to mention I have to get the ex to agree (don't I)...

 

[seniorjudge]

What is the name of your state (only U.S. law)? New York

Hello again. Need some feedback on the following - the buyers who are interested in purchasing my home are having difficulty coming up with the downpayment. Long story short...I have to sell as part of a divorce (posted about this previously) and they want to buy house to rent out (investment). They need to have 25% as downpayment (this is what they've told me) as they don't plan to live in the property.

They initially asked about sellers concessions however have since been informed by their mortgage broker that they would have to live in the property. They don't plan to do this and do not want to lie just to get the mortgage. Now they've asked about sellers financing and I've done some research but think maybe I'm getting it wrong. Please correct me...I would continue to hold the title and would have to depend on them to pay the mortgage. If they don't pay, I could forclose on the property (take it back) since I hold the title. I also read something about them simply paying the mortgage that is on the property currently (not sure about that). Would the entire sale price have to be factored in?? It seems they want to somehow use the sellers financing for the downpayment as they've been pre-qualified for a mortgage. I'm so confused...

Not sure if you need this info, but I have a SONYMA mortgage (5.25% interest) and am close to losing the house. Have had to borrow to pay mortgage recently and just want it sold and out of my hair.

Is this an absolutely HORRIBLE idea which will surely jump up and bite me in the ****? Not to mention I have to get the ex to agree (don't I)...

You are so confused that about what seller financing is that I suggest you find another buyer who can pay you off entirely.

 

[CharlotteInvest]

sellers use owner financing all the time to sell a house in a slow market. the best thing to do is maybe a lease option for a few years that will turn into owner financing after they have shown they can commit to paying off your loan.

 

[LindaP777]

I would continue to hold the title and would have to depend on them to pay the mortgage. If they don't pay, I could forclose on the property (take it back) since I hold the title.

No. If your name if on the deed (and you are the legal owner) then you would evict not foreclose. You would only foreclose if the deed was in their name. (Best advice, keep the deed in your name. Evicting is a heck of a lot easier and faster than foreclosing.)

I, personally, would rather do a lease with option to purchase, over seller financed.

To figure the payments, I use; Loan Amortization Schedule Calculator

You all need to agree on the sales price, down payment, monthly payment (including who makes the property tax and insurance payment) terms (how many years) and get them to pay you directly, so then you can disperse the funds and know that it is getting done.

Also, don't pay any real estate commission until the close on the house and actually buy it.

 

[HomeGuru]

sellers use owner financing all the time to sell a house in a slow market. the best thing to do is maybe a lease option for a few years that will turn into owner financing after they have shown they can commit to paying off your loan.

**A: a lease option is not considered seller financing.

 

[CharlotteInvest]

indeed it is considered seller financing. anytime you pay someone elses obligation with the right to buy that is owner financing.

 

[HomeGuru]

indeed it is considered seller financing. anytime you pay someone elses obligation with the right to buy that is owner financing.

**A: oh brother, will you quit already.

 

[CharlotteInvest]

the less you speak the more people will believe in you. from your commits you know nothing about the garn st germaine act. here's a snippet from the act: (4) the granting of a leasehold interest of three years or less not containing an option to purchase.

the garn act is to establish methods that will trigger the due on sale clause common in modern mortgages. mortgage lenders seem to think that a lease option is a sale, so what makes you the authority?

also if l/o's are set up improperly the courts may determine they are a sale as well.

 

[HomeGuru]

the less you speak the more people will believe in you. from your commits you know nothing about the garn st germaine act. here's a snippet from the act: (4) the granting of a leasehold interest of three years or less not containing an option to purchase.

the garn act is to establish methods that will trigger the due on sale clause common in modern mortgages. mortgage lenders seem to think that a lease option is a sale, so what makes you the authority?

also if l/o's are set up improperly the courts may determine they are a sale as well.

**A: please read the initial post.

 

[FlyingRon]

the garn act is to establish methods that will trigger the due on sale clause common in modern mortgages. mortgage lenders seem to think that a lease option is a sale, so what makes you the authority?

.

Actually, the Garn-St. Germain act does the opposite. It provides relief from due-on-sale for a handful of events (divorce, adding children, etc..). It doesn't say squat on lease-options.
An option is not a sale until the option is exercised. If your note wants to apply an option as a sale, they would need to state that. In actuality, many notes specifically mention NOT leasing the house without permission as a breach of the contract and allows them to call the loan.

A contract for deed however, is a sale.

 

[HomeGuru]

Yeah Ron. Boo IdiotInvest.