Seller Financing While Under Mortgage?

Question

I apologize if this is a "silly question," but I can't seem to wrap my brain around it. Can a seller realistically offer Seller Financing on a property that they themself have a mortgage on?

Wesley B Williams · Answer

@Thomas Welch you would need to be able to pay off the mortgage to do seller-financing, so if there was only 5k left on the mortgage you could pay the 5k as a down payment to pay off the mortgage and the seller could carry the note on the rest of the negotiated price. You could however do a sub-to deal with a mortgage on the property, pace morby has a lot of great info on creative financing. Good luck and happy new year!

Thomas Welch · Answer

Thank you all for the responses. This has given me a lot to go on. Hopefully, I will be able to find a solution to help them out.

Happy New Year!

Adam McQuiston · Answer

@Thomas Welch it can be done but beware what everyone said previously. Also we write up a lease and purchase offer  and both contracts are contingent on each other. This allows you to evict easier if needed so they don’t have ownership.

Rick Pozos · Answer

You could do a wrap around mortgage. Google it for all the details, but basically buyer pays you, you pay mortgage. Hopefully the buyer is paying you a little more than the mortgage.

These work great when you can get owner financing at 3% or 4% and then turn around and sell at 6% or 7%. Also the price you sell at is a little higher also. You can get a nice little cash flow from the difference. 20% difference in price and 3% interest difference should equal about $500ish cashflow for quite a few years.

Seth Engelbrecht · Answer

You can do a contract sale on a property with a mortgage. Look for a “due one sale” clause in the mortgage to see if a contract would make the mortgage due with the sale. If there is bo due on sale clause there shouldn’t be an issue. If there is a die on sale clause you can talk to the lender and see if they will approve it. Depending on the lender they typically don’t mind so long as the payments are being made

Thomas Welch · Answer

Thank you, @Wesley B Williams. I am trying to get creative to help out a family member. I'll check out pace morby!

Seller Financing While Under Mortgage?

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