I am looking at a home, but not sure what this means, "Seller may carry with $9900.00 for 10yr/ due in 5 yrs with payments around $528(P&I)

Asked by Itsreallycheryl, Apache Junction, AZ Mon Nov 14, 2011

@10% rate. Sorry, but I can't figure this out. They also said they may do a lease purchase, which is what I need until I can get a loan. Any ideas?

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Jeffrey Masich’s answer
Jeffrey Masi…, Agent, Scottsdale, AZ
Mon Nov 14, 2011
Dear Its:

The seller is looking to help someone that cannot qualify for a conventional loan right now, providing 5 years to get their credit squared away an come up with a new loan to pay off.

There are seller may carry homes available like this. Typically, they are looking for at least 20% down. This helps people that may have cash for a down payment but not the credit to qualify for a conventional loan. Very few sellers are going to carry a 30 year mortgage.

To see the seller may carry homes available: http://link.flexmls.com/ub7k1q5dnm5,12

Let me know if you have any questions.

Jeff Masich
HomeSmart Realty
Web Reference:  http://ArizonaHomesLand.com
1 vote
Don Tepper, Agent, Burke, VA
Mon Nov 14, 2011
It means good stuff for you.

It means that the seller is willing to do owner financing, though at a somewhat high interest rate.

To translate: The seller wants you to put down $9,900. In return, the seller will offer you a loan at 10%. The loan will actually be due in 5 years, but it'll be calculated as if it were a 10 year loan. He's calculating the principle and interest at $528. It looks like the loan about would be $39,954 (approximately). Is that about right? So the total purchase price would be about $49,854.

At the end of 5 years, you'd still owe $25,206. You'd have to pay that to the seller at that point. You could do that by paying him cash, or by getting a loan for the balance. Recognize that it's quite difficult to get mortgages for that small amount, so you'd probably have to figure out some other way to repay him the remainder of the loan.

A lease-purchase would also be OK. However, buying it outright with seller financing (as you've initially described it) would be much safer for you.

Hope that helps.
1 vote
Brad Bergami…, Agent, Prescott, AZ
Mon Nov 14, 2011
It just states that there is a 10 yr amortization on the loan. This will be a balloon payment in 5 yrs (means you will have to finance it in 5 yrs or pay it off). Not sure why anyone that can carry would do a lease purchase or option. (P&I) Principal and Interest.
1 vote
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