First Owner Financed Deal
I am not sure how to go about this. The owner of a 5 family house and I have agreed for me to buy the property no money down he will hold the mortgage for 10 years with a balloon. SO I have to write a note for the financing terms and write a purchase agreement? Then the title copmpany will record everything? Please advise.
Thanks
Most title companys will help you out with the paperwork.
Purchase Agreement
Promissary Note
Mortgage
Disclosure Statement
Warranty Deed
You also could go online to www.UsLegalForms.com to get the state specific purchase agreement. Then you can doctor it up as needed. I think they also sell home buying packages if your a do it yourselfer. I recommend you have the title company do a title search and all that. Congratulations!! Good Luck!
I just closed on my 2nd rental property, and went through this quite a bit with the mortgage loan people and the underwriters. The rule of thumb is that they will not consider the mortgage payment as debt only if you are getting the mortgage +25% in rent. 25% is the amount the tack on for maintenance/expenses/vacancy, etc. So if your rent covers the mortgage +25%, you should be able to qualify for a loan that will not consider the mortgages as part of your debt. Anything less will be added to your debt ratio.
Hope that helps!
Becky
Just be sure to look around...a few months back I tried to refinance some school debt and the bank told me that they would only count the income that I reported on my tax return (i.e net income AFTER depreciation) I thought this was totally off base since my taxable income for my rental was only around 6-10% of Gross. needless to say I failed to qualify for the loan...
One other question. Does the +25% cash flow for the rental property need to be for every individual property to count, or does it just need to be the average for all my properties?
Andrew
For most numbers they calculate it is likely they are looking at your entire portfolio and not each property. For some numbers they might have a specific requirement for the property you are trying to finance. Certainly this is so for LTV for terms of your loan. They will also look at the LTV for your portfolio.