I have 2 people lending me money to do this flip but she whats a documentto send to an attorney because she is lending me the money for a 90 day period but it has to go back to her 401k in that time frame to avoid penalties can i do it myself or should i get an attorny
@Melvin Owens - So she is giving you a 90 day loan? Is she the seller or related to this deal? What is your back up plan if the house does not close in 90 days?
The usual documents for a loan are a promissory note and a deed of trust or mortgage, depending on which is used in your state. The promissory note covers the terms of the loan. The deed of trust or mortgage gives the lender a security interest in the collateral.
This has bad idea written all over it. She's using that exemption to take money out of a 401k for a short time without penalties. If anything goes wrong its going to be turned into a distribution and be subject to taxes and penalties. Is she trying to make you responsible for those taxes and penalties? That would probably not be allowed under your states usury laws because those taxes and penalties can approach 50% of the amount withdrawn.
Jon Holdman, Flying Phoenix LLC
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