Our house is owner financed and we are looking to buy a new home.

Asked by Angelique, 17921 Sun Jan 27, 2008

My first question is, since this financing isn't on our credit report, will the payments be considered when they do our debt to income ratio? There are a lot of things wrong with this house, which is probably why it was owner financed. My other question is, if we do not think we can sell for the full amount that is still owed, what are our options? Is there some sort of loan we can get (without it being a lien on this house obviously so that we can sell) to pay off the remainder of what we owe after we sell?

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Dale Archdek…, , Philadelphia, PA
Sun Jan 27, 2008
Hi Angelique, as to your first question...your current mortgage payment, if it does not show up on your credit report then no, it will not be included in your debt-income ratio. Bonus for you.

If you can not sell the home for the full amount owed, I think you have two options. One would be to simply rent the property out and over time make the repairs necessary to increase the value, and by holding the property for some time you will also gain the benefit of appreciation to help close the gap between what you owe and what the property is worth.

The second option, depending on your situation would be to negotiate with the former owner. Just the same way you would negotiate a short sale with a mortgage lender, you could potentially negotiate with the current lien holder on the property to only accept what the property is actually worth and what you can realisticaly recieve in a sale.

-Dale Archdekin
Web Reference:  http://www.liveinphilly.net
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