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In most states, giving someone the option to purchase the property will trigger the due on sale clause. Whether the lender will detect and/or make an issue of it is anyone's guess. Lenders have little incentive to call a note that is being paid on time nowadays.
The other option, where the buyer comes up with cash (most likely borrowed) to pay off the existing mortgage, and the seller carries a note secured by a second mortgage for the balance is that the seller is going to have a hard time borrowing enough money to either refinance or get a second mortgage to pay off the note. Not to mention the buyer will have to disclose the $75,000 loan from the seller. The bank that loans the money to pay off the existing mortgage will likely want the buyer to put some of its own money in. So if the buyer has to make a down payment anyway, he may be able to get a loan for the entire purchase price. Long story short, in three years the buyer is still going to owe just about as much as the original purchase price.
What you're proposing seems feasible. You should probably speak with a real estate attorney. When you find a buyer, have your attorney draw up a contract.
And yes the contract can be used to show that your other house is being paid for...I don't know that it would count as income.
Quote:
Originally Posted by goodday
We are selling a home in which we still owe bank $$, Question is can we sell lease purchase or carry the buyers for say 3 years and a ballon payment?
Has anyone done this? can you do it ?
How to do it and protect ourselfs?
Question #2
If we did this can we use that contract as income proof to purchase another home?
Thanks
After reading our mortgage contract, we have a [ Second home Rider ] in which we cant rent, pool in rental, or anything else?
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