Posted by Steve-Atl on March 22, 2000 at 09:07:07:
I would structure it to give you the best yield possible and the greatest protection possible. Since it is worth little on the note buyers market, why not make it worth your while by creating favorable terms.
Try this on for size: 15.9% interest, 6 points to be added to loan balance, interest only payments for 18-24 months, then a balloon. You get a good yield (19%+) and the buyer gets lower interest only payments until they can refinance.
Regarding security, the key with second mortgages is staying aware of the status of the first. You have to be ready to quickly step in to bring the first current and foreclose to protect your interests.