Posted by Michael Morrongiello on February 15, 2001 at 21:02:56:
If you write up the $24,000.00 2nd lien note to have no monthly payments and to simply accrue 7% interest annually, then in 5 years the single lump sum payment should be approx. $33,661.24 that you would owe.
The goal would be see that when that 1st lien is paid off at the end of 5 years or sooner, the $24,000.00 2nd lien slides into a 1st lien position.
Now that 2nd lien could be converted into cash “if” the seller wishes to explore its sale.