Help with SELLER FINANCING

[Luis Herna]

Hi There,

let say that a property is being sold at 1M.  Seller has 300k in equity rest is on a fannie mae loan. Instead of me giving a down payment, seller will finance the 300K in 5 years and we want to structure the whole 300K as a interest-only loan . So my questions:

1. Can the entire 300K be structured as interest-only loan to avoid taxes or just part of the 300K can be structured as interest?

2. In a Seller Financing deal, once I start paying the seller the interest-loan + mortgage, the equity being built should goes to me and not to him correct?

3. Can some show me a good promissory note template?

[Chris Seveney]

Quote from @Luis Herna:

Hi There,

let say that a property is being sold at 1M.  Seller has 300k in equity rest is on a fannie mae loan. Instead of me giving a down payment, seller will finance the 300K in 5 years and we want to structure the whole 300K as a interest-only loan . So my questions:

1. Can the entire 300K be structured as interest-only loan to avoid taxes or just part of the 300K can be structured as interest?

2. In a Seller Financing deal, once I start paying the seller the interest-loan + mortgage, the equity being built should goes to me and not to him correct?

3. Can some show me a good promissory note template?

 1. you could structure it as interest only, and the lender would pay ordinary income tax rate on the interest paid. even if interest rate was 0% they would still pay around 4% (FAR rate) in taxes.

2. If you are paying interest only, you are not paying down the mortgage. on the $700k you would be, but equity depends on whether its a land contract or traditional note  - depends on structure.

3. good template google fannie mae security instruments.

Also, my question is if you have not money for a down payment, how can you afford a $700k p&i payment along with $300k I/O payment?