I'm intrested in a property, the ad states, "seller will take back a 10% 2nd mortgage for 24 months at 7%"

Question

what does that mean? I know 7% is an interest rate but thats about it

Answer 1

It means that the seller will be acting like a lender for 10% of the purchase price for a two year term at a 7% interest rate. For example, on a 100k loan, the seller will finance you 10k at 7% interest for 2 years. It's to help people who have no money to put down on a property, but can qualify for a 90k loan (in this example). At 7%, that's pretty good for a second lien position. Usually you'll see them around 9-10% so they can turn around and sell them.

E-mail me if I confused you more.

Regards

Answer 2

The seller will "carry" a loan of 10% of the sale price of the property for 2 years if you will pay 7% plus the total loan amount he carries. Make sense? Example:
The sale price is $100, 000. Assuming you put no money down on the purchase, your first loan to the bank would be $90,000 at whatever % for whatever length of time; your second loan would be to the seller for $10,000 at 7% for 2 years. People do this sometimes when the buyer cannot get enough money financed by the bank and the seller is trying to make the sale or trying to make a little money themselves.

Answer 3

basically he is trying to entice someone who does not have money to put down on a home. For example: If the house is worth $100,000 he would be willing to finance a second mortgage of $10,000 at 7% to be paid in two years. Your first mortgage would be $90,000. On paper it would look a little more enticing to the bank as it would appear as if your putting down 10%. The mortgage rates are so competitive now that if you have good credit you can get 100% financing spread out over 30 or 40 years and not have to worry about paying that off in 24 months which is a VERY short period of time. If your in Connecticut email me.....I can help you.

Answer 4

Probably means that the seller is willing to carry back a second loan for 10% of the selling price for 2 years at a 7% interest rate.
What that means is if the price is say $100,000, the seller would be willing to loan you $10,000 (ie. 10%) for 2 years (24 months). That loan would be second to your primary loan on the property... so say you put $5000 down, you would need to loan a total of $95,000. You could get a first loan of $85,000 and the owner will loan you $10,000 for 2 years..to give you the $95,000. DO BE CAREFUL with this..you will need to come up with that $10,000 after 2 years are up...be sure you can do that..

Hope that helps!