owner is willing to hold a second mortgage of roughly 65k buyer only needs to bringin approx 109,000.
what does this mean exactly?
The house is on the market for $170k
2007-12-03 11:22:41 · 8 answers · asked by Debbie 4 in Business & Finance ➔ Renting & Real Estate
do you think this is a good way to buy a
house?
2007-12-03 11:28:38 · update #1
This isn't fraud. It's just like having a second mortgage on the home. You get a mortage for $109,000 and you have a second mortgage for $65,000. You make two seperate payments each month. One to the mortgage company you chose, and one to the previous owner.
This can be a good way to buy a house, but I wouldn't recommend it in most cases. It's better to just get one mortgage for the whole thing.
2007-12-03 11:50:07 · answer #1 · answered by Meghan 7 · 0⤊ 0⤋
This means that the owner is willing to carry a note for $65K (i.e. finance you for a second mortgage). This may or may not help you get a primary loan for a home. If this note is declared on your HUD-1 form, then banks will know that you are financing $174,000, and not just the $109,000 that you are asking them to finance. Legally, it should be declared on the HUD-1 form. If it is not declared, then it would look like you paid $65,000 as a down payment, and that you are only financing the $109,000. If your were to foreclose on the house, and the bank found out that you had a second mortgage that you did not report at the time you applied for financing from them, they can hold you criminally responsible for lying on your financing application - which is a felony. Having to get a second mortgage means you are financing the property for 100% of the value of the property, and that is something that lenders are shying away from right now - although not completely.
2007-12-03 11:37:21 · answer #2 · answered by Christopher B 6 · 0⤊ 0⤋
I need additional information to decide IF this is a good deal or not. Owner carry terms vary widely and you need to look at the interest rate he is charging you, the terms or length of the financing, the appraised value of the property, the use of the property, any income the property will generate, what the taxs, insurance, other carrying costs of the property are.
Just because a seller is willing to carry a note does not make this a good deal or a bad deal. Why is he selling? Why has he priced it at 197K? Why is he willing to carry? The ONLY reason he is willing to carry a note is because he CAN"T sell at that price for an all cash offer so the property is probable overpriced and that is the ONLY way he can get his price; by offering better terms by carrying a 2rd.
Look at the number of the total deal and see what your rate of return off the investment will be and then compare your risk versus your return. THAT tells you if this is a good deal or not.
2007-12-03 13:11:51 · answer #3 · answered by Jerrold J 3 · 0⤊ 0⤋
Sounds like the seller is an investor. You should ask him for a lender where you can get 109k. He should know of one.
Ask him to explain the whole deal to you, and don't worry if you have to ask him to do so again and again. I am sure he is used to having to explain his deals over and over again.
Also ask how long he is willing to hold 65k note. Most private mortgage note are for 5 years or less with a balloon payment needed at the end of the term.
2007-12-03 12:02:46 · answer #4 · answered by Anonymous · 0⤊ 0⤋
It means that if you can find a lender that will allow a seller carried second for 65K you can buy the house for 174k. You will need a first trust deed of 109k (63%).
Ps, the first answer is incorrect, the seller carrying a second will NOT keep it in their name nor will it be using their credit.
As for it being a good way to buy a house? It could be under the right circumstances and it's not fraud, your main problem would be finding a lender to agree to that scenario.
2007-12-03 11:29:15 · answer #5 · answered by Anonymous · 0⤊ 0⤋
it means it is overpriced, most likely they are a flipper investor and need the 109k to payoff the person they bought the house from and the 65k is the profit. They hope you default or can not complete the whacky financing they are offering
See those weirdo deals all over this area.
2007-12-04 01:57:24 · answer #6 · answered by Anonymous · 0⤊ 1⤋
this means the owner is willing to keep everything in his or her name and have you make all the payments under their credit score for the lower rate
2007-12-03 11:27:10 · answer #7 · answered by GG 7 · 0⤊ 0⤋
it means he is willing to engage in fraud.
2007-12-03 11:44:04 · answer #8 · answered by Anonymous · 0⤊ 1⤋