I found a property that i would like to live in myself. the owner is an out of town owner and is asking $115,000 with $15,000 down and he will carry the remaining balance, also i have been informed by the realtor that he has an assumable loan, my question is how would i structure this deal?
Thank You
Sounds like the deal is already structured for you on the seller’s terms – a retail sale with seller financing. You pay $115K – $15K down and the seller finances the balance at whatever interest rate and loan term you negotiate. What you don’t know yet is whether the seller is offering you an all inclusive trust deed with a wraparound mortgage, or a contract for deed. You also don’t know the loan terms, the amortization schedule, and your monthly loan payment.
If the seller is offering you a wrap around mortgage on a 15 year loan, your debt service could be too much for your budget. If the seller is offering you a land contract, with a two year balloon payment, will you be able to refinance with a conventional lender two years from now?
If you want to assume the seller’s existing loan (which probably means you will have to qualify for the loan), you will have to pay the seller the difference between his loan amount and the purchase price. Whether you want to do this will depend upon the loan amount, his interest rate, and the number of payments left on the mortgage loan.
If this is your first time buying a principal residence, consider getting your own financing on a 95% HUD first time buyers loan program and take advantage of the government’s $7500 tax credit for first time homebuyers.
If you bring your own financing to the table, maybe you can negotiate a lower purchase price.
Just my 2¢ worth, not sure how good the advice is.
Check the competing houses in the area first to see if you can get a better deal. 15% down is kinda steep for a house that you’ll be living in; 5-10% is normal. If you aren’t able to get a home loan right now thru a bank, consider a lease option. That way you get time to fix your credit, live in the house, and keep your payments under control plus have a lower down payment.
What interest rate and monthly payment is he asking you to pay?