In general, if a seller carries a loan for a three -year term for $ 50,000, what would be a good interest payment?
Really appreciate the feedback.
Depends on the deal and the motivation of the seller. I've had sellers get 0% and I've had other sellers get 15%.
Most of mine need 6% to carry. And that's with me having experience and references, but for much longer terms than 3 years.
Maybe start at 5 and hope for 6.
How much down? Will it be a mortgage where you own it, or a land contract where you don't?
@Edith Ruano Also depends a lot if it's 1st or 2nd position. 1st position 6-7%, 2nd position 7-9%, are some of the deals I've done as a buyer.
One gets 3.5% interest FDIC with a CD. So double that sounds fair. Also credit, situation related.
Thanks for the feedback. Would you charge a pre-pay penalty if paid before the 3 -year term?
Thanks for the feedback.
Would you charge a pre-pay penalty if paid before the 3 -year term?
Seller would be at 2nd position and would be a mortgage. We're hoping to finalize at 5.25%
@Edith Ruano If you provide more details, we can give you better answers. It sounds like you are the buyer and the property seller will provide financing to you. I don't want to assume, though. Are you buying this for yourself? Will it be owner occupied, a rental or a flip? All these things matter and affect the answers. With owner financing, there are lots of possibilities but, in general, the borrower and lender will want the best terms and those are usually opposite things. The trick is to reach the win-win situation where both sides are happy given the circumstances.
I am the seller.
The home sales price is $600000
Buyer will be putting down $550,000
And wants us to carry $50,000 for a 3-year term, balloon payment at 5.25%