My fiance and I have plenty of $ for a down payment on a house, but can not obtain a mortgage. A seller is offering financing @ 8%, and after 1/2 of it is paid (30k) he will give us a deed for trust. If we fall behind and don't pay for 30 days, he pockets all of the money we have invested and we're evicted. He has offered to pay taxes/insurance and just add it on to our principle.
He said that he has "been doing this all of his life". What do you think?
2007-05-12 09:50:37 · 11 answers · asked by PlasticTrees 2 in Business & Finance ➔ Credit
We would be dealing w/a real estate attorney as well (for the documents).
2007-05-12 09:58:05 · update #1
If you have plenty of dollars for a downpayment, and you can't get credit, it sounds like you've had credit problems in the past. This guy is looking for that to happen here.
There are two ways to buy with owner financing. One is as described above, and this is bad for both of you, but especially you. You have no guarantee that he can ever deliver a clean deed at the end of this transaction. Far better for him to sell you the house, deed it to you, and then take back a mortgage. If you fail to pay, he can foreclose and evict you. You would still lose most of what you've paid, but you have some assurance that he can indeed deliver a cleanr title. When he tells you he's done this all his life, he may mean he's sold and resold the same house over and over.
2007-05-12 10:31:05 · answer #1 · answered by Still reading 6 · 0⤊ 0⤋
The advantages of this financing option is that it often has lower qualifying requirements, less paperwork, and the process from qualifying to getting into the house is much faster. On the other hand, this financing option also has a few drawbacks such as: you are dealing with an individual and not a financial institution, you will probably need to involve a real estate attorney to handle the agreement and title transfer, you will probably have to pay higher interest rates, and the terms of the financing will not be as flexible as a financial institutions’. Even if the terms are not ideal, you can view owner financing as a way to gain equity in a home until you can qualify for a more lucrative mortgage.
So make sure your able to buy out the contract without any recourse when conventional financing is available to you.
2007-05-12 09:57:33 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Ask him to transfer the deed at closing like any other sale. In exchange, you will sign a mortgage in his favor the same as you would for a bank loan. This gives both the seller and the buyer the same protections a bank and borrower would have. It sounds to me that he bought a 'Get Rich in Real Estate' tape set from a midnight infomercial and actually knows less about Real Estate than you do. If he has been 'doing this all his life', it has probably been for the same house every time.
2007-05-12 10:22:04 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
If you do this the property would not be transferred to you
until you get the Trust Deed, without that transfer he would
be entitled to take the property back, though it would be
a little more complicated with a contract of sale.
The seller wants to avoid the fees and legal fees that he
would need to foreclose if you were to miss a payment.
Suppose that the seller passes away before you get a trust
deed, the contract would not be binding on his heirs,
also if the seller is sued, you can lose your property in a
settlement if he lost.
I would consult an attorney just to make sure but I am pretty
sure that he will tell you to get the Trust Deed and protect
yourself.
2007-05-12 12:25:00 · answer #4 · answered by justgetitright 7 · 0⤊ 0⤋
An easy way to protect yourself is to choose the closing company yourself. They will have an attorney (very reasonable) to help you. Remember they will be making money on doing the closing also. I would guess if you have a large down pmt. that 8% is a little high.
2007-05-12 10:46:15 · answer #5 · answered by BobbyK 3 · 0⤊ 0⤋
If yall make a notorized contract, then you should be safe, that way if he screws yall over. You Can sue him and have proof.
but get everything in writing. The deal sounds like a rent to own program i have seen over here. As i said get everything in writing, notorized etc. Make sure you make all the payments and you should be safe.
2007-05-12 09:54:31 · answer #6 · answered by bandfreak006 3 · 0⤊ 0⤋
I think it sounds fair. But PLEASE PLEASE PLEASE do this.....whatever you two agree on, draft up a document stating EVERYTHING and have it legally notarized with both of you signing it. Remember if you do want it notarized, don't sign it until you are in front of the notary public. You can get this done at any law firm or bank. A typical notary costs about 25-50 dollars. This way if he goes back on anything he says, you will have a legal binding document that you can use in court. Good luck.
2007-05-12 09:57:11 · answer #7 · answered by mark s. 4 · 0⤊ 1⤋
Find a mortgage broker. It's their job to shop around for the best rate.
2007-05-12 20:04:14 · answer #8 · answered by Anonymous · 0⤊ 0⤋
I'd ask a real estate lawyer. They'd be able to tell you if this is fair or even legal. I don't see anything illegal about it but you never know.
2007-05-12 09:56:58 · answer #9 · answered by Anonymous · 0⤊ 0⤋
30 days is too short,at least 90.
2007-05-12 09:54:08 · answer #10 · answered by Anonymous · 0⤊ 0⤋