Owner Financing
I am currently renting a property from a woman i work with. She is wanting to sell me the home via owner financing, but neithor of us know anything about this situation. I do not have the credit to buy it using a bank, but i do make all my payments ontime and she is needing to get out from under it asap. She has 2 mortgages on the house, and her payments total 1100. I am fine with paying that, but im not sure how to work out the contracts, shes kind of helpless so i told her i would do all the leg work on the deal, but am not sure where to begin. Any information would be greatly appreciated. Shes selling the home to me for 122500 and i know it is worth more. My husband and i are going to do some work to the home and hopefully sell it within a year. as i said i know nothing about this process and need all the information i can get, she is wanting this done within 2 weeks.
Sam
The Land Contract also known as a Contract for Deed or in some parts of the country, Installment Contract is designed as an agreement between the Seller and the Buyer for the purchase of real property in which the payment of all or a portion of the purchasing price is deferred. They can be created on or used on most types of property: Residential, Land Only, Mobile Home with Land, Commercial, and other Mixed Uses.
The purchase price may be paid in installments over the period of the contract, with the balance due at maturity. When the Buyer completes the required payments, the Seller must deliver valid legal title by way of a deed. During the period of the contract, the Buyer makes installment payments on the purchase price and is entitled to possession and equitable title to the property. The Seller holds legal title and continues to be liable for payment of any underlying mortgage or loans.
The Buyer may assign and convey his/her interest in this "Contract" or any part thereof provided, however, that such assignment or conveyance should not result in any impairment of Seller's position. Under no circumstances shall any assignment or conveyance release the Buyer from obligations under this "Contract" unless the Seller specifically releases the Buyer in writing.
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can you break it down for me,
Say shes selling it to us for 122500. We are going to give her 3000 down.
im not sure what she owes on it though, i just know she needs to have 1100 paid to her a month cause thats what her payments are. Im having to do everything on this and i dont know what in the world im doing.
thanks
sam
At this point I would suggest learning more about this subject as one can not teach you it's full in's and out's possible this may be of help in the learning process:
http://www.thecreativeinvestor.com/Product301-Creative_Investing_Using_Contract_For_Deeds.html
You will find some other great courses on TCI as well at:
http://www.thecreativeinvestor.com/Shopping_Cart-index.html
Such as lease option or subject to will aid in the completion of this deal
A few hints:
Agree on a sales price for the property with financing terms that provide a designated number of payments at predetermined intervals at a specific interest rate.
Realize that in a land contract, the buyer receives the legal deed to the property only after the seller receives most or all of the installment payments.
Include a clause in the land contract that allows you to prepay the contract amount without penalties. This allows you to improve the property and pay off the loan early or at the time of resale.
If the seller does not agree to prepayment terms on just a land purchase, negotiate a release clause that permits you (the buyer) to subdivide and sell lots while allowing the seller to release the land to the lot buyers and accept the money from lot sales as installment payments.
Review the terms of a land contract with a real estate attorney or agent before making or accepting any offers.
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i appreciate you help, but i am needing someone to do the math for me, and break it down, like i said she is wanting to move quickly, and i dont have much time. I work everyday and i am having to do all the leg work on the deal. So if anyone could break it down for me it would be awesome. She is not interested in interest rates or anything, although i want to be fair to her. Today i will find out what is owed on the property and then i guess go from there. I just dont know how to figure out the math of it nor do i have any idea how it works.
thanks though
sam
Doing the math is not a problem my friend, it's the lack of details that is a problem.
What are the terms?
What is the interest rate?
Is there a balloon payment?
Is it a full term loan?
Is it going to be recorded? If so who pays the fee?
Moreover, on and on we can go?
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see those are all the things i know nothing about and need help with. she just wants out from under the house and doesnt care. but
i was wondering if it is possible to get financed for a loan if my husband and i have credit scores under 500. we can put 5000 down. is it worth trying, or should we stick with this? i dont want to look like an idiot and go apply for a loan somewhere and them laugh at me...
Hi,
What a good opportunity for you!
Since time is apparently limited, if I were you, I'd find a sympathetic real estate attorney and ask if he or she can lead me through buying a fsbo. The attorney could either help you through, or point you to the sources for the info you need, while providing appropriate guidance. I know it'll cost a bit, but since time is of the essence, you may just have to bite the bullet for professional help.
Otherwise, contact a local investor's club and hope they have a meeting soon, or can provide someone who can counsel personally or on the phone... maybe for a fee if necessary.
Hope there's help in there somewhere....
Sorry,
I was just grumbling about people using abbreviations that I don't understand, and I went and used one myself!
You probably already know this, but if not:
"Fsbo" means "for sale by owner."
Now that's off my chest....
Under the most basic of circumstances just write up a simple contract that states:
1. Purchase price
2. monthly payments
3. agreed upon interest rate (if they don't care keep it as low as you can)
4. length of contract
Have both parties sign and then have an attorney work up the details.
I would keep the owner financing rather than get a conventional loan at least until your credit scores are higher so you can get a better rate. You might also want to keep copies of all the checks you send the owner because a good payment history will help you get a loan later on.
Hi, My name is Eric I am new on here 1st post! Why dont you have her fianance the house to you(since she already agreed on this) And in 6 months or so Refianance the house instead of trying to get a loan with a credit rating of less than 500. Pay Her off and then make payments to the lender for 6 more months and sell the house like you said you planned in a year pay the lender off and come out with better credit and some cash possibly.
cs0114.
This is what i do . I find some one like your talking about wright the contract. Get it notorized. Take it to court house . Let the owner know you want to make payments to morgage compony every month. I have all mine set up like draft my account every month and sent straght to morgage lender. Heres a record of you paying it. To me your giveing to much trust to seller. Seller can easyly take money for months with out you knowing. This had happened to me. I lost all money and place to live. Do to no legal contract and only proof i had i sent money order to seller witch they cashed and spent. Of course house went in to forclosure. My .02
If you give me address may be I can check property profile free Thanks
well the bank called today and they can finance me for 70 % of the loan, and the lady says that shes going to work on figures and see how much the house is worth and maybe the owner on the house will finance the rest of the part which wouldnt be much. what do u guys think of that? let me know
sam
Ok, soo i think im going to go with the straight owner financing. I have found a title company to go through, and i have that all under control. My question is, the owner owes less on the house than what we are buying it for, and has 2 mortgages. Is it possible for her to refinance for the 122500(buying price) and us just take everything from there?