Hi, this is a follow up to a previous post I made:
How to renegotiate
"I purchased a loft in December 2012. I put down a deposit equal to 20% of the purchase price. The seller is holding the note. The note is supposed to start this December at a rate of 6% per year. It is a mortgage amortized over 15 years with a balloon payment after 10. Under the terms of the agreement, the seller has been allowed to continue living in the loft only paying the real estate taxes and maintenance. The plus side of this for me was that I would not be accountable to pay the note until the seller moved out in December 2014. At this point, the seller is interested in staying longer and I am deciding what I should do. I don't know if I even got a good deal to start with. I know that the interest rate was not good--6%. Any ideas what you would do in this situation and what I should negotiate with the seller if he would like to stay past December? Thank you."
Basically I have spoken with seller who is living in loft I own, and we are going to renegotiate the terms of the note. I can bring the rate down to 4.25% and have a 7 year mortgage with no balloon. Or we can keep things the way they are, the seller continues to live in the loft paying just maintenance and real estate taxes. I could then start to set money aside so that when the note does eventually start, it will be reduced and I will have less of a principle and therefore interest to pay. I could have a clause that states I pay the note at a later date at 4.25% as well. I have a lot of flexibility in my negotiation here...What do you think is the best thing to do? Basically it is a matter of whether I should charge rent or start the note etc...Eventually I will have to start the note....
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