Is this normal what Lender is asking? - Posted by Sherry W

Posted by Ed Garcia on January 23, 2001 at 10:31:40:


What you are doing when you amortize the payments for 30 years with a 5-year call. Is, your allowing the buyer to have a small payment making it easier for them to qualify for the new first, however the loan is only for 5 years.

If you buyer doesn’t pay you off in 5 years, you can foreclose on your second taking back the house. Hopefully the house will be worth more in 5 years than it is today and so you will be all right. Many sellers attitude is a don’t care attitude because they know that they have income for 5 years and then either get a lump of money or a house with more equity than before.

On your second question, I would sell the house and carry back the second. The reason is because, now I have an asset with no liability. That means you have your second mortgage as an asset, and have no debt. You are not liable or responsible for the first mortgage unless you decide to foreclose. That means one less loan in your name allowing you to have more borrowing power.

Ed Garcia

Is this normal what Lender is asking? - Posted by Sherry W

Posted by Sherry W on January 23, 2001 at 10:19:11:

Hi, Have a question. I have a prospective buyer(already approved for 85%)and I will TB a 15% second.

Their lender called me and wants me to amortize for 30 yrs. with a balloon pymt. in 5 yrs.

Because If I TB second’s, I would like it on short term owner financing. What if they are unable to pay balloon in 5 yrs. or cannot refinance? Am I stuck owner financing for 30 yrs.?

One more question, please. On the same house, I also can cash out at 80% LTV. Have a T/B for L/O. Which would be the better deal to go with?

Thank you, Please help.

Sherry W