Tenants Have Poor Credit...but I Want To Sell Them The House!
Hello,
I don't know what to do with this situation. I have a duplex where I live downstairs and a couple lives upstairs. I am putting the house up for sale in May and they have showed great interest in wanting to puchase it. The price will be around 140,000. I know they have terrible credit and will not be able to secure a loan. What options do I have....I don't mind if they live in the house, while I own it, but I want the money up front!!??
Alyssa
Since you don't want to sell it until May, why don't you all sit down and go over their credit and try to clean it up before hand. When May rolls around, their credit score should be higher, they will have cancelled rent checks from you to show that they have made their payments on time so they will be more qualified to get a mortgage. Worse case scenario, you may have to hold a seller's second mortgage in order for them to qualify. You then could raise the price of the house and have some extra cash flow every month. Just a thought.
Thank you for the reply...what is a seller's second mortgage???
Let's suppose your buyers only qualified for a 90% ltv (loan to value) mortgage (where the lender would require them to put down 10%) but they didn't have it. However, they may allow a seller's second, which is where the seller (you), would act as a bank and have them make payments to you for the other 10%. ie. sales price $100k mortgage amount $90k, you hold a mortgage or $10k. It may or may not be feasible for your situation, but it is an option.
The downside to this is that if they have bad credit, then theres a good chance they will not pay the bank. If the bank forecloses, you probably won't get any money for your second mtg.
Quote:
On 2004-10-21 22:51, DaShow wrote:
Let's suppose your buyers only qualified for a 90% ltv (loan to value) mortgage (where the lender would require them to put down 10%) but they didn't have it. However, they may allow a seller's second, which is where the seller (you), would act as a bank and have them make payments to you for the other 10%. ie. sales price $100k mortgage amount $90k, you hold a mortgage or $10k. It may or may not be feasible for your situation, but it is an option.