Ok, I have found a house I want to purchase. The owner is willing to let me pay him over 4 years instead of him getting one lump sum. He will let me pay him with no interest. Sounds great but I cannot afford the monthy payments like this. Is there any way to get a loan to pay him a smaller sum every year for four years. I
2007-02-14 03:22:23 · 9 answers · asked by caitybeth3 2 in Business & Finance ➔ Renting & Real Estate
I can very easily afford regular mortgage payments. It would just be hard to pay the house of in four years. He is my fathers friend and is willing to let me just make payments to him interest free over four years.
2007-02-14 03:32:16 · update #1
This is a great deal, but make sure you have the details in a written contract and do all the necessary title paperwork. You will be saving hundreds of thousands of dollars in interest by not getting a mortgage, AND you'll own a house outright in four years.
I would find a way to make this work. Figure out how much you can afford each month/year (if he lets you pay him annually then you can save monthly in a money market and earn 5% interest all year long on your payments before you make them). Cut every other expense you can think of in order to afford the maximum amount you can. Then, calcuate how much is leftover and try to get a loan for that amount. If you can't qualify for a bank loan you should try www.prosper.com where you can tell your story and other people might lend you the money.
If you can't get a loan, ask him to extend the maturity--maybe you can pay him over 5 years? That will significantly reduct the payments. Or consider getting an additional part time job to pay the payments with. It's just for a few years, and it will be well worth it!
2007-02-14 04:08:10 · answer #1 · answered by lizzgeorge 4 · 0⤊ 0⤋
It's not a good deal if you cant afford it. Get a regular mortgage or work on a more creative solution-- a first loan with a bank and him doing a carryback for the rest over a 4 year period at 0 percent. The only downside is that he is now in second position so he doesn't have as much power to take the house back if you default.
2007-02-14 04:28:15 · answer #2 · answered by Anonymous · 0⤊ 0⤋
What you might consider is what the payment would be if was paying for the house with a normal mortgage. Then take out a loan that just pays off his existing loan balance with him taking back a seller second for the difference at the payment difference.
He could make the payment interest free for 4 years with a balloon payment at the end.
Heres an example,
245K 30 year loan @ 6.375% = $1,528.48
He owes 187K
187K 30 year loan @ 6.375% = $1,166.36
58K Seller Carryback @ 0% $362.12 After 4 years you will have paid $17,381.76 and then cash out the $40,618.24 Balloon by using an equity secured line of credit.
2007-02-14 03:48:56 · answer #3 · answered by Kevin H 4 · 0⤊ 1⤋
If you can't afford the payments, you'll regret it later. You can try to obtain an interest only loan with a fixed rate. That may minimize your payment. You may try an ARM (Adjustable Rate Mortgage) which is fixed for a certain period (1-10 years) and the rate adjusts thereafter. Don't take on a payment you can't afford, you want to live comfortably without regrets. A good rule of thumb - don't have more than 45% of your gross income in debts.
2007-02-14 03:51:06 · answer #4 · answered by Martini Babee 4 · 0⤊ 0⤋
The red flag is you cant afford the payments.
Even if it is a great deal, it doesn't mean you have to do it. Why not get a normal mortgage? The payments will be lower.
This doesn't sound like such a great idea to me. Where are you going to get that lump sum every year for the next four years. I bet he is praying you default on this loan so he can foreclose and take his home back.
Be very careful.
RE Agent,
Remax
2007-02-14 03:29:30 · answer #5 · answered by frankie b 5 · 4⤊ 0⤋
Bad idea! Many of the others have also indicated this and they are right. If you cannot afford the payments NOW, then DON'T buy this house. Apparently you are not in a position at the moment to purchase a home, so another arrangement should be made. I also question the seller of this house. He must be nuts, as he is taking an enormous risk that you will default, and you probably will if this disasterous deal goes through.
2007-02-14 04:31:23 · answer #6 · answered by Anonymous · 0⤊ 0⤋
I too agree with Frankie. Get a regular mortgage. Your father's "friend" will get his money all in one lump sum, and you will have 15 - 30 years of affordable mortgage payments.
There's a saying: If it sounds too good to be true, it is.
Do not go ahead with this ridiculous 4 year plan.
2007-02-14 03:49:57 · answer #7 · answered by Enchanted 3 · 0⤊ 0⤋
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2016-10-02 03:14:43 · answer #8 · answered by Anonymous · 0⤊ 0⤋
I agree with Frankie - on this kind of transaction, you risk too much. Is the title clear now? Will it be clear in four years?
2007-02-14 03:32:19 · answer #9 · answered by teran_realtor 7 · 0⤊ 0⤋