how does seller finance work when I still owe on a mortgage.
Scenario:
Lets say im Listing a home for $450,000
I owe $250,000
If I want to seller finance this property, does the buyer need to cover the equity of the property?
Can I decide the interest rate on the mortgage?
Can I create a 30 year term?
I hear there’s a balloon payment involved as well in 5 years?
Honestly it’s so confusing.
Thanks in advance for your help.
In: Other
Your lender is highly unlikely to allow this. They will accelerate the mortgage and your call in your note asap. If the buyer puts down the entire amount owed or more, then you could do seller financing. Your existing mortgage is retired.
Aside from the above,
Balloon payments are more common on commercial properties but possible to include in the seller financed mortgage.
Terms are whatever the two principals write into and agree upon in the contract that is also legal.
If you owned your home outright you’d have a lot more options.
But you don’t. You have a mortgage. That severely limits your options in terms of seller financing, if your lender will even allow it at all.
You could explore, for example, the buyer taking over your existing mortgage somehow.
But there’s no way you could offer a buyer any loan you want while simultaneously paying your own mortgage. Your own mortgage is contingent on you continuing to own the property – you couldn’t sell it to someone else while continuing to pay the mortgage.
Is there any possibility that what you really want is just to rent out your property to someone else as a tenant? You could do a rent with option to buy.
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