Seller Carryback
I need a little help! I have a property on the market at $299,900. I owe $37,000. I want to sell and carryback. I want 30% down and will carryback $209,930 at 7.5%
interest for 20 years. Right now I have a full price offer with $40,000 down and the buyer getting a loan for $50,000 to come up with the down payment. The problem is
..... the buyer or (buyers lender)wants the $50,000 loan to be in first position( first mortgage) and "me" to be in second ( second mort.) In the event of foreclosure
....what will be the ramifications? I think I'll be totally screwed if the "first" forecloses first! Am I right or do I have any recource? My goal is to sell and have enough money from the downpayment to start a small fast food restaurant and still have a nice cash flow coming in every month. Does anyone have any suggestions??????Thanks!!!!!
errrrrrrr sticky as the second you have some rights also because your second before the property gets forclosed as a lien holder you are notified you have a couple of options here pay what the back owed is and lease option it to some one else and take a nice chunk out of it again or by your interest back and sell it for the total amount depending on how you play it you might get more for it
As a mortgage broker - I would suggest that you don't go for the second lien position. You will be wiped off - if the borrower goes into foreclosure - and whatever recourse you have - it will not be worth it coz you will have sleepless night figuring out how to get your investment back. Here is another route to go if you are happy to start off with $40k for your resturant:
- tell your borrower to get a second mortgage lender like GB Home Loans or other similar niched second mortgage lenders to get the 2nd lien mortgage.
- this will allow you to place your mortgage on the first lien; and if the buyer screws up in the payments - you can foreclose on him/her and buy back the property.
- plus if you go to a foreclosure - and you turn out to be the highest bidder - the 2nd lien lender's lien will be wiped off!
Hope this helps.
Another suggestion is for you to borrow the money thru a refi yourself, and then take back the first. You then have your cash, and the strength of a first. The buyer will either pay or default anyway, and you still have plenty of equity. Or you could carry it all and sell the note at discount, but you wouldn't get the gravy cashflow.
[addsig]
I say you should refi. if you can get an assumable note. and let the buyer assume the note. you take your cash and be done. or carry a smaller amount for a shorter period to cut your risk.. that is just opinion and spur of the moment response... but do what you think is best for your situation...