Financing in Charlestown>Question Details

Suz, Home Buyer in Norfolk County, MA

we have a builder who has a house sitting on market for a year he has an adjustable rate on his building loan

Asked by Suz, Norfolk County, MA Thu Jul 23, 2009

would he be allowed to do a seller finance or would the bank allow this

Help the community by answering this question:


That's not a loaded question at all. I disagree with the other answer. I will answer this question but I make the disclaimer that I am not an attorney and the following is NOT legal advice:

You can just create an all inclusive trust deed! (A.I.T.D.) It's also nicknamed a "wrap".

He can also sell that contract after he has created it! (I buy them!)

But the ability to sell it greatly depends on how much difference there is between the underlying 1st and the wrap that he is proposing to create. The ability to sell it also depends on the interest rate, the payer's credit, the length, amortization and balloon amount.

-Try to pick a payer with a 650+ credit score, when they come to look at the property ask them to have their credit report in hand to show they mean business.

-Make sure the interest rate is higher than the underlying 1st position (you'll be keeping the difference for the amount of the first, good deal- huh?

-Make sure it is the same length of time as the first.

-It is also wise to have a 10%(or more) cash down payment (15% if it is not owner occupied)

That is how you create good wrap that you CAN sell - and when you do sell, you can get the most money for it! I can even give some custom clauses that would strengthen the value even more! Just call me up, I'd be happy to answer any questions and give a free consultation. (760)-296-1573

Again, this is not legal advice but just my opinion of what is getting top dollar in today's market.

But if the seller does not want the option of liquidity than create the AITD however you want.

It's just nice to have the option of selling the note if you so desire.

You can reach me through my website:
or (760)-296-1573
0 votes Thank Flag Link Thu Jul 23, 2009
good opinion is not to consider it and go elsewhere for a home........let's assume you and he could structure something......first, the only way the builder or any mortgage company could mortgage you is for you being granted a warranty deed and a title committment without standard exceptions....he would have to have his lien holder agree to release the lien on your property, which would be determined by how much they would accept to do so from him.......also, if you bought land contract, even if his commercial mortgage doesn't have a due-on-sale clause, (some do-some don't) the deed wouldn't transfer and you could have more headaches than ever if he defaults on his loan, doesn't pay his sub contractors, files bankruptcy...anything could happen, and you could loose what you have put into the deal....laslty, what does the rest of the sub look like?.is it completed?.partially completed?.if he goes under, are there empty lots around you or other models that could go back to the bank and lower your value?..there is a mulitude of deals everywhere to look at, besides this one.....very best regards..bob mcclure- success mortgage partners- plymouth, michigan.....
1 vote Thank Flag Link Thu Jul 23, 2009
This is a loaded question, do yourself a favor and contact a Real Estate Law Firm if you are considering this.
1 vote Thank Flag Link Thu Jul 23, 2009
Hello Suz- Some interesting thoughts here. I assume that this deal on this new home is a fantastic deal that you cannot find anywhere else in the area? That would be the only reason to truly get involved and close such a deal.
If it is such a great deal, I'd highly recommend you speak with a RE attorney soon to represent your interest. I know of a few that we do some business with. They would speak with you for a free consultation, but then of course there would be fees if they helped draft or review any agreements or deeds, etc.
You don't want to get burned. I like the guy from California's answer, but as he said - he is not an attorney, and also he does not specifically know Mass. state law.
If you need any further help, please contact me. Thanks and good luck,

Ken L.
0 votes Thank Flag Link Fri Jul 24, 2009
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