Partial Owner Financing Question

[Dena Sommers]

I own a home that is too large to rent - no demand.  I have a 2.5% interest rate on the balance of the mortgage.  We will be moving but I like to owner finance what is left on the mortgage at a higher interest rate because I do not need to pay it off to qualify for our next home.  I want to profit off the interest rate and perhaps offer 6% rate on what is left on the mortgage. Is there a way to do that?  Thanks!

[JD Martin]

Quote from @Dena Sommers:

I own a home that is too large to rent - no demand.  I have a 2.5% interest rate on the balance of the mortgage.  We will be moving but I like to owner finance what is left on the mortgage at a higher interest rate because I do not need to pay it off to qualify for our next home.  I want to profit off the interest rate and perhaps offer 6% rate on what is left on the mortgage. Is there a way to do that?  Thanks!

Well, what would be happening is that your buyer would be buying your house subject to the existing note, since you can't legally sell the property without paying off that note or transferring the debt to the new buyer. Your name and credit would stay with the existing note, which you would keep paying on - ideally yourself with money you receive from the "buyer", because if they don't pay your credit is wrecked and your house is in foreclosure.

If you search on here you'll see everyone and their brother looking to do Subto and it's a nightmare unless the buyer has the funds to pay the note off if/when the original lender figures out you don't occupy the property any more and are attempting to do what you want to do, since most loans are going to specify that performance.