U.S. CitiesCity-Data Forum Index
Covid-19 Information Page
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 08-22-2009, 11:55 AM
 
13,969 posts, read 12,898,677 times
Reputation: 5293

Advertisements

My problem is a bit different from most experiences here, but it is still a big problem for me. I stand to inherit a SFD (paid for--no other inheritors involved) in So Cal worth about 450-475K. I want to sell outright and bank the money in CD's but interest rates are abysmal. I've thought about carrying back the mortgage for 15 years, which would provide a handsome monthly income to live on (I'm pushing 60 & don't expect to make it past 75 for health reasons). I'd give preference to a buyer who wants to stay put but several things worry me:
1. if the buyer should later decide to sell, can I stipulate that the 15-year mortgage follows the sale?
2. I'd try to get 15-20% down; maybe I'd get it, maybe not, but there's still all the attending headaches servicing paper for 15 years (unless CD interest rates make a spectacular rebound, which I don't expect them to)

What would some of you do if you were in my shoes---sell and get hammered by 1% interest at the banks or carry and take your chances? Thanks in advance for any opinions offered.
Rate this post positively Reply With Quote Quick reply to this message

 
Old 08-26-2009, 10:41 AM
 
13,969 posts, read 12,898,677 times
Reputation: 5293
No one can offer an opinion? Is my post offensive in some way?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 08-26-2009, 11:54 AM
 
161 posts, read 457,395 times
Reputation: 85
Quote:
Originally Posted by thrillobyte View Post
My problem is a bit different from most experiences here, but it is still a big problem for me. I stand to inherit a SFD (paid for--no other inheritors involved) in So Cal worth about 450-475K. I want to sell outright and bank the money in CD's but interest rates are abysmal. I've thought about carrying back the mortgage for 15 years, which would provide a handsome monthly income to live on (I'm pushing 60 & don't expect to make it past 75 for health reasons). I'd give preference to a buyer who wants to stay put but several things worry me:
1. if the buyer should later decide to sell, can I stipulate that the 15-year mortgage follows the sale?
2. I'd try to get 15-20% down; maybe I'd get it, maybe not, but there's still all the attending headaches servicing paper for 15 years (unless CD interest rates make a spectacular rebound, which I don't expect them to)

What would some of you do if you were in my shoes---sell and get hammered by 1% interest at the banks or carry and take your chances? Thanks in advance for any opinions offered.
This is a great way to generate passive income. I would sell the house with owner financing upon approval. Make sure you have a realtor and real estate attorney to help guide you. You need to make sure you are protected in case you would have to foreclose. If you don't need the cashflow, I would consider having the proceeds placed into your IRA or retirement account for tax free growth. Double whammy. You generate income and also earn interest in a tax free interest bearing account. You may also allow the loan to be assumable, in the event the owners sell the home. In the event you want out, You may also sell the note at a later date on the open market. Offering seller financing will also help expedite the sale process. Sorry no one answered your question. Hope this helps
Rate this post positively Reply With Quote Quick reply to this message
 
Old 08-26-2009, 03:27 PM
 
13,969 posts, read 12,898,677 times
Reputation: 5293
Quote:
Originally Posted by fumanchu41 View Post
This is a great way to generate passive income. I would sell the house with owner financing upon approval. Make sure you have a realtor and real estate attorney to help guide you. You need to make sure you are protected in case you would have to foreclose. If you don't need the cashflow, I would consider having the proceeds placed into your IRA or retirement account for tax free growth. Double whammy. You generate income and also earn interest in a tax free interest bearing account. You may also allow the loan to be assumable, in the event the owners sell the home. In the event you want out, You may also sell the note at a later date on the open market. Offering seller financing will also help expedite the sale process. Sorry no one answered your question. Hope this helps
Thank you much, Fu. So assuming the buyer is going to want to sell at a later date (probably sooner than later) and the new buyer doesn't want to assume, am I forced to take the cash? My strategy is to go a little lower on the price and offer the financing to make the sale more attractive since the property itself is a fixer of sorts and over the long run I'd recoup the lower listed price with the interest I made on the mortgage. If buyer #2 wants out of the whole arrangement then I let the property go for a cheaper price for nothing, really. Can the assumable be made mandatory for buyer #2 or is that against the law? Can I stick in a prepayment penalty if buyer #1 pays off before I've had a chance to recoup the difference between my lower selling price and what I would have gotten if I'd just spent the money to fix it up and listed higher?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 08-26-2009, 05:47 PM
 
161 posts, read 457,395 times
Reputation: 85
Quote:
Originally Posted by thrillobyte View Post
Thank you much, Fu. So assuming the buyer is going to want to sell at a later date (probably sooner than later) and the new buyer doesn't want to assume, am I forced to take the cash? My strategy is to go a little lower on the price and offer the financing to make the sale more attractive since the property itself is a fixer of sorts and over the long run I'd recoup the lower listed price with the interest I made on the mortgage. If buyer #2 wants out of the whole arrangement then I let the property go for a cheaper price for nothing, really. Can the assumable be made mandatory for buyer #2 or is that against the law? Can I stick in a prepayment penalty if buyer #1 pays off before I've had a chance to recoup the difference between my lower selling price and what I would have gotten if I'd just spent the money to fix it up and listed higher?
Your only option is to place a contingency clause for the pre payment penalty. Don't know if the buyers would be open to that, but you can always try. Also, you can't force the mortgage onto the 2nd buyer.

By offering seller financing, you already have a leg up on the competition. There's no need to lower the sales price. Usually it's the other way around because you are offering an incentive and the buyers are not having to go through a full doc mortgage process to get funded.

I would place a 2-3% pre payment penalty in there. Worst comes, they pay off or sell the house down the road, you just take your proceeds and do a 1031 exchange into another property without having to pay taxes on the proceeds. You can also be a private lender for someone looking for a private mortgage. You have many options. You can always PM me down the road if you need additional advice. You're thinking way too hard about this process. Have an experience realtor assist you, and have a real estate attorney in place to help you draft the mortgage. Make sure your realtor knows what you are trying to do. Most realtors have no clue when it comes to creative financing. Don't discount the note if it's paid off early. Set your price for market conditions and stick with. NO NEED TO LOWER. Good luck. We are here for you.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 08-26-2009, 06:33 PM
 
13,969 posts, read 12,898,677 times
Reputation: 5293
Solid! Thank you, Fu. You're the best!
Rate this post positively Reply With Quote Quick reply to this message
 
Old 08-26-2009, 07:21 PM
 
161 posts, read 457,395 times
Reputation: 85
Quote:
Originally Posted by thrillobyte View Post
Solid! Thank you, Fu. You're the best!
You're welcome. PM me anytime. Good luck.
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Similar Threads

All times are GMT -6.

© 2005-2021, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top