Posted by Ed Garcia on January 05, 2001 at 09:30:18:
In the future when doing a seller carry back, ask the seller to subordinate their position to a re-fi, rate reduction.
What that means is that the seller will allow you to rewrite your first mortgage for a lower interest rate. This also protects the seller’s second mortgage, because it lowers your monthly payment increasing the cash flow the property.
What I would do right now since you haven’t pre-arranged a subordination, is talk to your second holder and request it now, explaining to them how they will also benefit.
NOTE: Tell them the reason you’re asking for subordination, is because there isn’t enough equity for you to re-finance at this time. Now this gives you an opportunity to set them up for a DISCOUT. There might be a great opportunity to get the second holder to DISCOUNT THEIR NOTE.