Different type of question regarding interest rates (loan officer, credit, fees)

[mom2ten]

I have friends who want to buy a peice of property from me. They have pretty bad credit. With their credit being what it is they may (will) run into financing problems. If I were to hold the note for them, what would be a fair interest rate to charge? $80,000 for 30 years
I guess I'm asking what mortgages are going for with bad credit.
Thanks!

[VictorBurek]

you cant get a mortgage with bad credit today through traditional means. HArd money lenders deal with poor credit but they charge a lot of upfront fees and rates between 8 and12%.

[mom2ten]

Originally Posted by VictorBurek

you cant get a mortgage with bad credit today through traditional means. HArd money lenders deal with poor credit but they charge a lot of upfront fees and rates between 8 and12%.

I'm thinking of 7%. I don't want to take advantage of them, but I can't see giving them the same rate that my good credit gets me. I worked hard for it. Originally they wanted to simply take over the payments on my mortgage.
From your answer it seems that 7% is a fair deal. Thank You.

[Bette]

I agree with Victor.

[jdm2008]

Originally Posted by mom2ten

I'm thinking of 7%. I don't want to take advantage of them, but I can't see giving them the same rate that my good credit gets me. I worked hard for it. Originally they wanted to simply take over the payments on my mortgage.
From your answer it seems that 7% is a fair deal. Thank You.

I think for a stranger it would be higher but for friends 7% is fair. Not a professional opinion though....

[manderly6]

What is your plan B if they stop paying?

[FalconheadWest]

If it's not your current primary residence, you can't owner finance without being a loan originator anymore. You're going to need to get a loan officer involved to handle the paperwork, with you still being the "bank". Rules changed last month...

[mom2ten]

Originally Posted by manderly6

What is your plan B if they stop paying?

We've discussed this because I explained to them that I'm not 'buying'.I'm selling.
They want to build on the acreage and when their credit is good enough, refinance through conventional means.
They understand that any monies spent are non-refundable if they default.

[mom2ten]

Originally Posted by FalconheadWest

If it's not your current primary residence, you can't owner finance without being a loan originator anymore. You're going to need to get a loan officer involved to handle the paperwork, with you still being the "bank". Rules changed last month...

Now this is an interesting point....maybe some background will be helpful.
I own 10.11 acres consisting of 4 seperate lots but comprising a single homestead. They want to buy the 3 lots that together make up 6 acres. We are treating it as a lease to own type thing.....they'll make payments directly to me and when they have it paid for (or find other financing) they get the deed.
So, I guess it is a part of my primary residence?

[TimtheGuy]

Originally Posted by mom2ten

We've discussed this because I explained to them that I'm not 'buying'.I'm selling.
They want to build on the acreage and when their credit is good enough, refinance through conventional means.
They understand that any monies spent are non-refundable if they default.

7% on bare land is as good or better deal than a bank would give someone with strong finances. I would say you should charge a more questionable buyer at least 10%.

I have never heard of not being able to owner finance without a mortgage guy in the middle. I would say on bare land you definitely don't need a mortgage person involved. You will want to use an attorney though.