AITD - Posted by Obi

Posted by JohnBoy on February 09, 2002 at 12:39:59:

To avoid from the lender finding out that you sold on contract you would just not allow the contract to be recorded. Some states may require contracts to be recorded in which case you would have no way of hiding it from the lender if they were to ever check title on the property. But as long as the payments are always made on time and kept current then it is highly unlikely the lender would ever call the loan due over this. Contract for Deeds are so common in my State and they have been for years. I’ve never heard of a lender calling the loan because the property was sold on contract. In fact it’s so common in my State that many lenders here will let the seller borrow against the property after it’s been sold on contract up to the amount the buyer owes on the contract.

AITD - Posted by Obi

Posted by Obi on February 09, 2002 at 01:18:37:

I have the following scenario and would like some clarifications and guidance in understanding “wrap-around” or AITD. Please feel free to correct me as I am new to this forum and trying to gain some knowledge.

I’m the seller with a California house that has a 100k “non-assumable” loan @7% 30 years with P&I of 665/month sell it to a buyer for 150k via AITD. Buyer gives me 15k (10%) downpayment and carries a balance of 135k @9% 30 years. The deal is that buyer pays me 1086/mo for 3 years. After 3 years, buyer will refinance the property for 140k, pay the underlying 1st loan and give me my remainder 35k.

Will this work?

Re: AITD - Posted by JohnBoy

Posted by JohnBoy on February 09, 2002 at 04:01:21:

The buyer’s balance owed after 3 years financing $135k at 9% would be $132,061.16.

Out of that the underlying loan would get paid off with the remainder going to you.

You want to make sure you add the taxes & insurance on top of the buyer’s $1,086 P&I payments.

You have the right idea!

Re: AITD - Posted by Obi

Posted by Obi on February 09, 2002 at 10:34:00:

My next question is if the underlying loan is “non-assumable”, how can I make sure that the “due on sale” clause be not effected?

In the re-finance process, will it be easier then for the buyer to qualify for loans?