Question @ How I Take Back 2nd? - Posted by Sherry W

Real Estate Investing
#1

Posted by DavidV on February 27, 2001 at 18:24:52:

I think most people want the wrap note to be at least as long as the underlying note. If you’re already locked in to doing an 8 year note you may want to pay extra principal so you’re not paying on your loan for 3 years with no income coming in. A 15 or 30 year might be nice, everything after 11 years is gravy. I think you still have your terminology upside down. If you do a 48k loan to your buyer that is a first for him. If he then went out and got a 5k loan on top of that to fix up his house that would be a 2nd. Or maybe i’m just delerious from too much creonline. :slight_smile:

#2

Question @ How I Take Back 2nd? - Posted by Sherry W

Posted by Sherry W on February 26, 2001 at 11:42:34:

Hi,

I have a fixer upper that my husband & I were going to rehab and live in. Well, now we have decided to sell even w/ owner financing. We did not want to sell but we are really strapped financially right now. And this would help us get back on our feet. Because I have been holding 2 other Investment properties for almost 6 mos. One is under contract(waiting to close).

My question is I owe about $22,700.
Mtg. $246.27 mo.
Ins. 43.14 mo.
Taxes 261.00(but that is with me homesteading) without homesteading is about 640.00 a yr.

Buyer is going to put 5K down and make $800.00 mo. pymts.
Which I amortized over 6 yrs. at $796.61 monthly on 10% interest.

How do I construct this TB 2nd with my Homeowner Ins. and Taxes?
Do I pay these or does the buyer?
I have a DOS clause with my 1st mtg.
Would a wraparound mortgage be the best?
Are there any clauses I should know of to protect us in the contract?

I really could use some help with this. You guys are great and have helped me alot with other questions.

Thanks,
Sherry W

#3

Sorry. Maybe more understandable. - Posted by Sherry W

Posted by Sherry W on February 26, 2001 at 23:04:45:

Okay, I’m selling for 48K. Now I understand better reading your responses. No I don’t want to get into trouble.
I have 11 yrs. left on my 1st mortgage. So if I understand this I amortize the 2nd for at least 11 yrs.

Thanks
Sherry W

#4

Re: Question @ How I Take Back 2nd? - Posted by DavidV

Posted by DavidV on February 26, 2001 at 22:14:27:

Not sure i understand your question either on the 2nd. How long do you have your loan (246.27) amortized for? When you ask of structuring the TB 2nd do you mean how to structure the financiing of the whole loan to your buyer? Your lawyer or title company will write the note for you. You can either wrap your note by giving the deed and they will be able to homestead, but that very blatently violates the DOS. A little more discreet way would be to sell contract-for-deed as Vic suggests. You would collect his payment and then pay your mortgage company, unless your buyer insists on a third party collection. As for clauses you could put in the contract that its not to be recorded, altough they could if they wanted too. As for taxes with the CFD you would have to call your homestead department. In my state you can only homestead if you got the home by deed or decree. Your state may be different. You would have a landlord policy if you do a CFD and your buyer would need renters insurance to cover his stuff (if he chose to get it). I would point this out to them.

#5

Re: Question @ How I Take Back 2nd? - Posted by Vic

Posted by Vic on February 26, 2001 at 21:13:29:

Sherry,

I’m not sure I understand your question, but I’ll try to help anyway.

How much longer do you have to pay on your mtg.?

If I was you, I’d set this up on a wrap (land contract) & have the buyer make pmts. to you for the length of time that you have left on your mtg. If your mtg. is amortizing over the next 18 yrs & your buyer wants to amortize over the next 6 yrs., this could create a problem. At some point your buyer will owe less than you do & that’s a no-no, because what happens if he decides to re-finance? You would either have to bring cash to the close or you might be defending yourself in a lawsuit. The only way I can figure you might do it this way is if you make sure you amortize your loan over the same amt. (or less) time as your buyer.

I would do a simple wrap for same amt of time as your loan.

Vic

#6

Re: Could use some advice. Please. ( nt) - Posted by Sherry W

Posted by Sherry W on February 26, 2001 at 18:45:52:

nt