Help! Need info. on seller financing for real estate?

Question

We have been asked by a buyer to carry 10% financing on our home. The sales price is $86500 We owe $79,900 and our realtor fee will be $4400.
How much do WE as the seller, bring to the table to satisfy our mortgage and realtor fee. Does this mean we will pay them $8650 and the difference in our loan plus realtor fees? I thought I understood but it is too late n the evening to call my realtor. Thanks!

Answer 1

Skip the realtor, talk to your lender!!! My understanding was that almost every mortgage written since the Carter administration required that the mortgage be paid off if the property was sold. If yours has this clause, and you sell it, you may suddenly be required to come up with $80,000. Can you do that? If not, you can't carry the paper on this deal.

Answer 2

There will also be additional fees involved in selling, such as bringing the taxes current, transfer taxes and any title company fees involved, so make sure you are accounting for all the fees involved, not just what you owe on the loan and the realtor fees. Make sure what all of these are in your state. The above referenced are for Hamilton County, Ohio, and the transfer tax is calclated at $3 per thousand, so that amount would be $259.50 in this scenario.

If you carry 10% financing on the home, you will not need to bring any money to closing other than what you cannot cover in fees. You are not givng them money for this 10%, you will be carrying and recording a mortgage on the home for $8,650. Then the buyer will make payments on that $8,650 to you, and once the full amount plus interest is paid off, then you will release the mortgage on the property. It should be drawn up as a mortgage on the property, with regular monthly payments to you.

I sold my home this way last year, the terms of that mortgage that I hold is that it is amortized at 30 years to keep the payments at a dollar amount that the buyer can afford, but has a balloon to pay the balance in 3 years. So I receive monthly payments for 3 years and then the balance is due at the end of 3 years. You need to determine what interest rate you will charge on your mortgage. Usually a second mortgage has an interest rate higher than the first, also you have a right to the credit report of the buyer so that you can determine their ability and likelyhood to repay the loan.

If you have additional questions, please feel free to contact me, I will be happy to help out in any way I can. Good luck!

Answer 3

This is a question that really needs to be asked before accepting an offer. Have you accepted the offer yet?

From what you describe, yes you will need to bring money to close. In the offer, did the buyer ask that you also pay part of their closing expenses?

Here is a rough out of the numbers:
Sale price $86,500 90% LTV, SC2nd 10%
New 1st loan = $77,950
Old loan balance $79,900
Realtor fees $4,400
total fees $84,300

assuming that the taxes are current and the buyer is paying all the remaining closing costs

You need to bring
$84,300 - $77,950 = $6,350 to close

Answer 4

You cannot carry the note because the bank that you owe owns the house until it is paid for. You do not want to carry paper for strangers if it was paid for. If they had good credit the bank would loan them the money. If they tear up the property and don't pay you are stuck with the loan. The Realtors will do about anything to make a deal and get that commission.. kinda like used car salesmen..

Answer 5

You'll need to cough up $6450 at closing. You also forgot to include closing cost. So if I were to do this type of a deal, I would have the buyer pay for all closing cost.

Regards