Have an offer on mine w/me holding second for 20% of purchase price.
What are the risks?
What kind of terms for this?
He is offering 7% for 15 yrs.
The risk is that you might not get paid. That you have to foreclose and take the property back. That’s why banks want downpayments–it lessens the risk of the buyer defaulting. You need to know the cost, procedure, and time required for foreclosure in your state.
The term can be anything you are comfortable with. There should be a late penalty written in. Do you want that note passed to a new buyer or do you want to be paid if it sells again?
This would be a good time to pay a real estate attorney to protect your best interests. Anytime you do something new, get advice.
Furnishedowner
Thanks Furnished,
So are you saying a second has right to forclose on a property? I didn’t know that. If so, how would that work for the lending institute that has a first position? Alo I was planningon getting a attorney and am just in the prelimanary stage.
A second has a right to foreclose. By then the first loan is probably in default, behind in payments, and you would have to cure that. Bring the payments current. If you didn’t, the first lien holder could file for foreclosure, cutting you out of the lunch line. Then your equity would vanish.
But it’s normal to buy and sell with 2nd mortgages! I have done both, and it’s safe as long as you are informed of the risks and the benefits both. The benefit is that it is much easier to sell if you carry a second mortgage, as the buyer has to come up with less cash.
So do a little research on 2nds in your state. See your attorney, and good luck on your deal.
Furnishedowner