|
|||||
|
The Mortgage Report Should You Hold A Mortgage On The Sale of Your Home?Suppose you are trying to sell your home or a rental property. You may have noticed that things aren't moving as quickly as they were a few years back when you bought it. You may have also noticed that people who want to buy the property are having a harder time getting their financing approved. If so, welcome to the post-correction market, where I've noticed a lot of vacant looks, glazed over stares, and utter incomprehension (and that's just here in the office). One thing you can do to make the property easier to sell is agree to finance all or part of the purchase price. Financing all of it may be difficult unless you don't need the money from the sale right away, and you were going to put the proceeds in CD's paying less than 4%, and would rather receive an income stream paying 6.5% or more. There are a lot of people like that (I don't meet many, since they never need to borrow money). If you do need the proceeds from the sale, say to purchase another property, but don't necessarily need all of it, agreeing to finance a fraction of the purchase price may help you sell. This is usually called a "seller held second". Say the asking price for your home is $200,000, and you have prospective buyers who have 5% ($10,000) to put down. But the lender will only lend them 90% of the purchase price ($180,000) leaving them $10,000 short. You could agree to finance the $10,000 difference by holding a second mortgage for that amount, and the buyer makes payments to you on terms that you agree upon, for example at 8% interest for five years the payments would be $202.76 per month. The net effect to you, the seller, is you walk away from the closing with $10,000 less cash, but you have a note and mortgage for $10,000 paying you 8% interest. There are hazards to this approach, and you should certainly seek your own counsel before doing it, but I do know from experience it can make a deal work that otherwise wouldn't. And in this market, you need every tool you can use. Carl Trawick is a Mortgage Specialist and Licensed Mortgage Broker with the firm Access e*Mortgage. He can be reached at 904-343-1145 or ctrawick@nefcom.net
|
      |
||||
