Verbal Acceptance of Offer: Owner-Financing Questions
I recently made a verbal offer to the seller of a SFH that was accepted. This is my third purchase, but the first time I will be utilizing seller-financing to acquire a property. To be perfectly honest, I expected the seller to prefer the all-cash offer, but I am thrilled she is accepting the following offer:
Purchase price: $40,000
Down payment: $2,000
Seller Financing: $38,000 first-lien mortgage fully amortizing over 15 years at a 5.0% fixed interest rate, resulting in monthly payments of $300.50
The questions I have are as follows:
-The purchase contract I am working on notes in the "Method of Payment" that there will be $2k down and a $38k mortgage to be held by seller. I am working on the addendum that goes into more detail. Exactly how much detail do I need in the addendum regarding the mortgage? I will use a mortgage drawn up by my lawyer, but I do not know how much detail about the mortgage needs to be contained in the purchase contract/addendum.
-Is it customary for the seller/mortgagee to send an annual statement that includes the amortization schedule, amount of interest/principal paid during the year, remaining principal, etc. to the mortgagor in an owner-financing arrangement? If so, would it be acceptable for the statement to be managed by a third-party (lawyer/accountant) and signed by both parties annually? I would like to reduce the burden on the seller while at the same time covering my bases.
-How is the Satisfaction of Mortgage document typically handled in this situation? Since it is a standard form, I assume when we arrive at that point we can both sign the document in the presence of a notary. Or would it be more wise to do so with the assistance and guidance of a RE lawyer?
Thanks!