Re: Creative Fianancing and Buyer Benefits - Posted by Ed Wachsman
Posted by Ed Wachsman on October 27, 1998 at 03:18:18:
I am trying to acquire this property which will be owner financed.
- How do my monthly payments become updated or even put on credit reports for the improvement of my credit status?
Unless the seller is a company or other entity that already has a relationship with a credit bureau it is highly unlikely that your payment history on this purchase will become part of your publicly accessible credit history. It will serve you well to make your payments from a checking account and keep both the canceled checks and the account statements in a safe place to demonstrate your good payment history when needed. A properly prepared amortization schedule couple with your canceled checks can help both parties keep track of the ongoing balances.
- Would I be able to use the equity on the house as payments are made?
You make reference to buying with seller financing. However, you don’t say whether they are financing the entire purchase via a land contract or note and mortgage or whether they are merely financing part of the purchase with a second mortgage. The implication of your questions suggests that they are providing a first through either a land contract (in which case it will be virtually impossible to use your equity with institutional lenders because will you not have title to the property) or a note and mortgage (in which case you can more easily access your equity since you will be in title).
- Would this property be considered legally a property that I have purchased?
IF YOU DO THE PAPER WORK CORRECTLY, the answer is yes. I STRONGLY URGE YOU TO BE REPRESENTED BY A GOOD REAL ESTATE ATTORNEY. THIS SOUNDS LIKE AN ACCIDENT WAITING TO HAPPEN.
- These buyers are older, and unfortunately they won’t be around for the term of the loan. What happens in that situation, should I be adding a clause to protect myself from family members that were not initially in the negotiation process?
I’m assuming you mean the “sellers” are older. I am not an attorney, but I can’t imagine a scenario where the seller’s heirs would not be entitled to the seller’s interest in the property according to whatever will and/or law will govern the matter. However, the heirs also will inherit and be governed by whatever land contract or note/mortgage you originally sign. They cannot change any of the terms without your consent. Life, in theory, should go on as if nothing had changed. Again, this is one of reasons I strongly urge you not to proceed without good legal representation. If the seller has an attorney you must not rely on that attorney. You must have your own.