Posted by David Butler on March 13, 2001 at 13:44:23:
Yes it would, and if they don’t know about it… it’s FRAUD!
However, you may have numerous options, depending on your credit and income histories, and the property itself. And you mention you don’t have a BIG down payment (which on a $120,000 would generally be about $24,000) - but in the deal you describe, you are talking about NO DOWN PAYMENT - a substantial difference, right?!
Several conventional lenders offer fairly attractive 100% loans right now, to qualified individuals. Some limited FNMA offerings just recently came out which even offer up to an additional $10,000 for closing costs, with no monthly payments, and the loan disappears if you stay in the home for 10 years. Some various “Community Development Programs” have had similar programs for the last 10 years or so.
Other conventional lenders offer 80/10/10 “Piggyback” loan programs, and I recently closed a jumbo SFR residential loan with a lender who offered an 85/15/5 program.
Their are also several subprime lending programs out there that go to 90% LTV (don’t know if any are still offering any 100% LTV programs on new purchase loans).
Finally, since the seller is willing to carry paper, you and he both have several options for structuring a workable deal, either as a simultaneous close to cash out the part he NEEDS to have, or working a suitable deal that he can cash out later. We have had a lot of discussion on the various parameters related to structuring that type of transaction, right down below here. Just click the search button, and use key words such as “simultaneous closing”, “table-funding”, “creating notes”, “structuring notes”, “creating notes to sell”, “structuring notes to sell”, etc. You should be able to quickly find most relevant answers to your remaining questions following that route.
Hope this helps, and happy hunting
David P. Butler