Posted by Paul Drummond on December 19, 2000 at 08:13:40:
that one of the best guides to seller carry back financing techniques is “Owner Will Carry: How to Take Back a Mortgage Without Being Taken” by Rosenberg and Broadbent. I’m not sure if it’s available at this site but, if not, you can order it from Jon’s site at:
Paul Drummond
Creating your own Mortgage - Posted by ReBeccah
Posted by ReBeccah on November 08, 2000 at 18:15:40:
I read JP’s articles on creating your own mortgage to purchase real estate and I am still fuzzy on the subject. How do you create a mortgage on a property, in order to buy that property when you don’t own it yet?(the deed isn’t in your name yet) A specific example would be great.
Thanks for your help
Re: Creating your own Mortgage - Posted by Jon Richards
Posted by Jon Richards on November 08, 2000 at 22:20:36:
You ask the seller to create a seller carry back mortgage for you to buy the property. It is best to add a balloon payment, even though you are the payor. You can then sell part of that note to an investor to generate up front cash for the property seller, and when you pay your balloon payment, the portion of the balloon the investor does not buy reverts to the property seller. The effect is you are giving the seller cash today and cash in the future and those totals can be more than the sale price of the property! It can dazzle everyone.
Here’s an example: You want to buy a $110,000 property with $10,000 down. You ask the seller to carry back the remaining $100,000 mortgage with interest only payments. You then sell ALL the payments and $36,000 of the balloon to an investor to yield the investor 12%. For that investment the investor puts $50,000 in escrow plus the $10,000 all go to you property seller. So your seller gets $60,000 at the close of escrow ($50,000 from investor and $10,000 from you down payment.)
When you pay the $100,000 balloon payment in 60 months, the investor only gets $36,388. The remaining $63,611 ($100,000 minus the $36,388 that went to the investor) goes to the property seller. The propery seller is dazzled! He (or she) got $60,000 at closing and $63,611 in five years…that’s more the the sale price of the property. They think you are a genius.
This concept is not always easy to understand…but we have a special web site which we refer FSBOs to. YOu can check it out at www.create-a-mortgage.com. Good luck, just become a master with your financial calculator. It’s key to wealth.
Jon
Re: Creating your own Mortgage - Posted by Deb Van
Posted by Deb Van on December 18, 2000 at 16:18:50:
I will check out the create a mort. site. How does one approach a seller or builder to do the carry back? Is this a good option to getting yourself financed after a BK?
Thanks, Deb
Re: Creating your own Mortgage - Posted by ReBeccah
Posted by ReBeccah on November 09, 2000 at 15:50:35:
Using your numbers as an example, my problem isn’t coming up with the $100,000. I can get financing for that. My trouble is coming up with the $10,000 plus closing costs. How do you create a mortgage to come up with that?
Re: Creating your own Mortgage - Posted by Jon Richards
Posted by Jon Richards on December 18, 2000 at 16:28:53:
Deb
this is a great option to help you recover your credit, because you are creating seller carry back financing in which the seller gets his or her cash, and you get a good loan.
The math is interesting though. So you will need a financial calculator, a place to sell the note and an understanding of how it works. The site is www.create-a-mortgage.com
Happy holidays
Jon Richards
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Re: Creating your own Mortgage - Posted by Deb Van
Posted by Deb Van on December 18, 2000 at 18:22:05:
Thank-you Jon for the follow-up. I visited create-a-mortgage.com and will call them tomorrow with a few questions. Do you think it would be difficult to approach a seller with this method if its FSOB; or a builder if its a new home. Also , you mentioned I’d have to find someone to sell the note to, which might be accomplished at notenetwork.com But at the site, these guys say they do that for you. Also Jon, is this what notes are all about-I really need to find a “primer” to learn about notes. Thanks again Jon.