If the loan term is to be for less than 10 years, then I would suggest doing an interest only loan at a rate of 6.0% with a balloon due when the note matures. I'm not sure why you cannot obtain financing, but I would make every effort to do so instead. If you are taking over payments for the current homeowner, keep in mind that the lender can call in the note if they find out and commence foreclosure immediately. Typically, this will happen by accident when your homeowner's insurance is sent to them. They'll notice that the insured is not the actual borrower and this is a breach of contract per the note. Good luck and make sure you ask a lot of questions.
You should expect to pay what your agent and their agent negotiates. Once you have an agreement on the terms, we would recommend you have a real estate attorney draft the agreement for signature. We would further recommend you get an executed and notarized trust deed to secure both your and the sellers interests in the property and have a title company record it at the county recorders office.
We hope this helps,
Mark & Kari Shea
Shea Real Estate
On average it is .5-1% higher than the going interest rate however this is another item that can be negotiated as a term of the sale. Are you obtaining a first loan from a mortgage company and then a small second from the seller? This is happening often now due to the high loan limits dropping. If this is your case you want to make sure that the first lender doesn't have specific stipulations to secondary seller financing and if they do you need to find out those terms prior to negotiating with the Seller.
Any additional questions please feel free to contact me.
All my best,
Ascent Real Estate, Inc.
1. Loan to Value. (How much of a loan)
2. Length and payments terms of loan
3. Your credit ratings and qualifications.
If you need them to finance because you would not otherwise qualify for a loan from a bank then expect to pay a higher than market interest rate.
If you would otherwise qualify but they prefer to carryback the debt, then you should expect a close to market rate.
Make sure you are working with or have an agent representing you as you need an advocoate in this kind of transaction. Feel free to let me know if I can help.
Good luck! The Marie Souza Team - Top Selling on Cape Cod
Cape Cod Real Estate Services