I am selling a house , Owner Finance on a wrap.
Buyer has no credit history . He has a down payment of 5000.00. What would be a fair intrest rate to charge in texas. (Bell County) 
This might be of interest ;D
http://www.mortgageloan.com/Rates/Texas/
Google ācurrent interest rates in Texasā for more results
hth
I used to get 10 to 12% on my contract for deed sales. I would charge 12% with little down and 10% if they put down $5000. What is the purchase price? If it is a million dollar home $5000 down is not a lot. If it is $50,000 then $5000 is a lot to put down. Even a $100,000 home is a fair amount down and you would have less risk. I would try to not be too greedy and in todayās market 8% owner finance rate would be about right. Maybe even 9% but not much more. The rate you are paying also has a bearing on what you have to charge too. If you are paying 10% you may need to get that much too. If you ask too much you can always come down a point but hard to go up a point.
Hope this helps some.
Good luck and thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile
Thanks for the info. , I wanted to make sure, I asked a fair intrest rate. Have a wonderful day.
When owner financing You typically set the rateā¦
It usually depends on the marketā¦
For Instanceā¦ 2 years agoā¦ we owner financed property at an average of 10.5%
for 30 yearsā¦
Latelyā¦ Most of the Notes weāve been carrying have been starting at a maximum of 8.5%ā¦ so, that we can get the people inā¦ Then we graduate it yearlyā¦
9.5, 10.5, 11.5ā¦ for the remaining balanceā¦
It also, depends on price range of the housesā¦
Lower end houses can carry a higher interest rate easierā¦
And it depends on the exit strategyā¦
Do you want them to refiā¦ do you want them to be long termā¦ are you going to sell the noteā¦
David Alexander
Lately.... Most of the Notes we've been carrying have been starting at a maximum of 8.5%..... so, that we can get the people in... Then we graduate it yearly....9.5, 10.5, 11.5ā¦ for the remaining balanceā¦
I have been staring at the screen trying to figure out a tactful way to askā¦What kind of idiot challanged individual would agree to a graduating mortgage, rather than a reasonable fixed rate?
When your owner financingā¦
They donāt agree to itā¦ thatās the way it isā¦
What I have found isā¦ that if I donātā¦ then the people will pay me foreverā¦
Weāll when you have large equities tied up in propertyā¦ 50k and greaterā¦ You start to understand Return on Equityā¦ could my money be working harderā¦
So, if your not going to get your money to put it back to work then you needā¦ to make it work harderā¦ at a rate you be ok with it workingā¦
Most people as well are very optimistic about there futureā¦ and if they can just get into a houseā¦ theyāll worry about it laterā¦ so, you make it easy for them to get inā¦ and they know going inā¦ hey in a few yearsā¦ Iāll refiā¦ or weāll moreā¦
Itās not about being dumbā¦
If they go get a mortgage thatās ok tooā¦
Not all of them canā¦ Not all of them want toā¦ and you shouldnt running a business financing houses at what they wantā¦ you do what will work for allā¦
David Alexander
It's not about being dumb....
IMHO: Youāre right, to hook up to that kind of financing would require a mixture of ignorance and desperation.
Has nothing to do with ignorance or desperationā¦
Do people go to a used car lot and pay 14% because they are ignorantā¦
Nopeā¦ Sometimesā¦ they choose toā¦
They canāt get other financingā¦ Bad Credit, Self employed, donāt trust banksā¦
On the otherhand youād be ignorant not to finance the propertiesā¦ where you get paid wellā¦ Your taking the riskā¦
David Alexander
Maybe Iām misunderstanding something or not making myself clear.
If I were going to buy a car, letās even say my credit really stank, and I had to go 21%ā¦I would still take the option of 21% for the full 5 yrs not 21% first year and a point more every year. Whether the car lot guy was trying to get the biggest bang for HIS buck, or wanted to encourage a refi with someone else later on and get cashed out is of no concern to me. The car lot guy that offered me a graduated interest rate would get one thing from meā¦a good look at my keester walking out the door.
Not if the car lot guyā¦
Started out at 17%, 18%, 19% 20% and for the remaining balance 21%ā¦
You see, you donāt make the money on the interestā¦ You make it on the spread and the fact that you bought at a discountā¦
When everyone else is still offering 9 - 10% and selling with Owner Financingā¦ You have to zigā¦ so your ads might say Owner Financing 7%ā¦ They callā¦ You say weāll give you 7% with 10%ā¦ How much you working withā¦ I only have 5% to put downā¦ What if I could get you in at 8.5%ā¦ They like the houseā¦ You talk to them and say I can get you inā¦ and we donāt put any ballons in our financing or prepayment penalties like mostā¦ But, here what we do have to doā¦
Weāll get you at 8.5% for Year 1ā¦ Year 2 - 5 it goes up 1% and stops in year five for the remaining balanceā¦ You can always refi us anytimeā¦ but, you donāt ahve toā¦
Now, if it were you and you showed me your keisterā¦ I would have never been having the conversation with you in the first placeā¦
If you think itās wrongā¦ then you havent been on the other side of financingā¦
Your taking a riskā¦ What if they defaultā¦ What if they file bankruptcyā¦ What if they trash your houseā¦ What if the market goes downā¦
On the othersideā¦
They get homeownershipā¦ with a low downā¦ No prepayment penalties, no balloons, all the appreciation, tax write offs, And NO BANKS or long red tapeā¦
David Alexander
Now, if it were you and you showed me your keister..... I would have never been having the conversation with you in the first place....
Heyā¦my keister isnāt so bad, I just like to take it with me when I leave.
Which I would do, to find all the things you describe from another lender except for an interest rate that graduates. A little math would show me that, even if I got in at slightly higher than your loss leader rate, by the end of term I would have saved.
I understand you want to make $ and you will with your methodā¦it makes good business sense for you.
However, you wonāt be making it from those that do their homework and shop around. Maybe you are the best deal in your areaā¦I dunnoā¦but in general, you have competiton willing to OF with a fixed rate and other favorable terms.
IMHO, of course.
Hey, its been fun. 
If Iām offering to owenr finance at 8.5% to start with a low down and NO Qualifyingā¦ That pretty much makes me the best game in townā¦
Once someone wants a houseā¦ itās just a matter of making it workā¦
Not sure where your atā¦ But, our economy is trashed here here in Texasā¦
You may think, Iām being unfareā¦ But as an investorā¦ You make your money upfrontā¦ In the middle and on the back endā¦
Wellā¦ here in Texasā¦ It aināt like that right nowā¦ Our Taxes and insurance run about 3 - 4% of a propertyā¦ Thatāll kill cashflowā¦ (the middle) meaning a 7% loan is like a 10 -11% at the startā¦ At the same timeā¦ there is plenty of propertyā¦ But, everyone else is doing a L/Oā¦
So, instead I completely owner financeā¦ If I canā¦ (they have enough down)
Now, to make money in this marketā¦ You either buy really cheapā¦ and Holdā¦ wait it outā¦ or do what I doā¦ make it so they āWill cash you outā So, your equity isnt tied up with a poor returnā¦
Iāve even offered some incentives likeā¦ No Payments, No Interest for 90 daysā¦
With 20% downā¦
But, go ahead and charge only 6, 7, 8% and watch the negative cashflowā¦ or charge 9 - 12% and watch the property setā¦
Two years agoā¦ my average interest rate was a fixed 10.5%ā¦ I would never do that fixed thing againā¦ They have No Incentive to cash you outā¦
Cash To Asset To Cashā¦ Rinse and Repeatā¦
David Alexander
I do understand where you are coming from, its just thatā¦aw, never mind. :
Hey, good answer to Heather regarding ādoing what you loveā
Peace, Brother
Nawā¦ nevermindā¦ donāt let me off the hookā¦
Hit me between the eyesā¦
THWACK
Iāve pretty much said whatās on my mind, I think. To go on would be overkillā¦howeverā¦
I get your perspectiveā¦I came into it from the consumer angle and, call me a bleeding heart, but I still see it as a choice of the desperateā¦bad creditā¦seesā¦no or low money down (great!)ā¦lower than market initial interest rate (great!)ā¦no balloon payment to scramble financing for (great!)ā¦first couple of years interest goes up a point a year (OK. not bad)ā¦is going to reach a point where interest rate is no longer favorable and is almost back to square oneā¦has to choose (if there is even a viable choiceā¦maybe position is still desperate) financing elsewhere with balloon payment or sticking and watching the interest rate climb forā¦how many years and reaching what interest rate (do you cap it at any point)ā¦Anyway, just seems like the folks with the most misery are the ones that get the THWACK
You can post a reply and reiterate your points if you likeā¦but, really, I understandā¦it works for you, and its a choice for folks that might have no other options. That can only be win-win, right?
I think you did miss a pointā¦
It capsā¦ at the 5th yearā¦ usually 10.5% or 11.5%ā¦
Putting balloons in loans are far worse than a rising interest rateā¦ that will cause immediate doomā¦ and cause foreclosure quicklyā¦ And the other prepayment penaltiesā¦ are the other answerā¦
This is the solution by most B and C paper lendersā¦
David Alexander
P.S. how did you do that moving Thwack thingā¦ way coolā¦
Erā¦Caps/5? Did you state that after the above? That kind of makes a difference. Iām sitting here thinking some schmuck is, in theory, stuck with a point per year increase for thirty years. :o
oopsā¦ :-[ ā¦found it
Year 2 - 5 it goes up 1% and stops in year five for the remaining balance
[shadow=yellow,left]Look for the <-M button[/shadow]
Youād bump into usury laws about 8 to 10 years into itā¦ depending on the stateā¦
They are actually winningā¦ unless they let it run a long time after the 5thā¦
David Alexander
P.S. that explains alotā¦
Usually buyers wonāt mind paying 10-12% interest on owner financed homes.
www.classifiedclub.com/mall2/realestatecoaching.html
David Garcia