I Need Clarification On CFD Payments
When the t/b makes payments on your agreed upon purchase price, is their payment being deducted from the balance owed to you and when it's time to re-fi they re-fi for the remaining balance? Or are they re-fi'ing at the agreed upon amount?
Thanks guys and gals
quinn
If you sell a house for 200K with 30 down
you are carrying back a note at 170K.
Take what ever your payment is, and figure out the interest rate due to the payment. I have a financial calculator so this is very easy.
note = 170K
payment = 1750 a month
Therefore my compounded interest rate is = 12.01%
So after 24 payments they would need to get a loan for $168,689.42
If you get a HP 12C it makes it real easy.
So to answer your question...yes: their payment is being deducted from the balance owed to you and when it's time to re-fi they re-fi for the remaining balance
I think we need additional information. Is the tenant renting the home on a lease option? If so, the original agreement would state if a portion of the monthly rental payment is applied as a down payment when the option to purchase is exercised.
Example:
2 year lease option, $5K payment for option consideration fee, monthly home rental price is $1200. Option agreement states $200 per month will be applied, and the option consideration fee as credit when the option to purchase is exercised. At the end of 24 months the closing would reflect a $7,800 credit toward the purchase from the seller.
Eric & Rosa
[addsig]
It's a CFD (Contract for Deed)...maybe I'm wrong but I thought that in the contract, it will state what you are financing along with the compounded interest rate.
Mine does
L/O are totally different from a CFD[ Edited by nebulousd on Date 11/14/2003 ]
Yes, I think that quinn may have his terminology mixed up. In a CFD you don't have a tenant/buyer. You simply have a buyer.
a lease option may be a little different from a CFD. With a lease option you set a price that you will sell for on a particular date. If you accepted rent credits to go towards down payment then you would deduct the monthly rent credit and the option consideration fee from the original amount (purchase price) agreed upon. All the money that they pay you aside from the rental credit has nothing to do with knocking down the balance.
It's like doing a plain rental and they decide to buy in two years for whatever amount you agree with.