I have found a home and owner willing to accept owner financing as the property is categorized in a way most loans from banks will not work with it. The owner is willing to do owner financing but I received this forwarded message from my agent this morning.
I spoke to the seller and he would consider a partial to full owner finance scenario. Short term with balloon payment and good down payment and acceptable monthly payment and interest rate. Let me know how your buyers feel about that and if you want to put an initial offer together. I can present it to the seller this weekend and if agreeable get him together with his real estate attorneys.
The owner seems to want me to create the terms of this deal myself in order to make a counteroffer to a deal more in their favor, but this may just be my paranoia at work.
The home is $154,000 and my first thought on how to present this loan offer is an interest rate of 4%, $8000 down for length of 15 years. I am unsure of how to work with a balloon payment as of yet.
I do not have the down payment and would need to find financing some how as well.
I feel overwhelmed and out of my depth on this one. Any advice would be greatly appreciated.
That interest rate is way too low and you don't even have the down payment, sometimes banks reject you for a loan because they are a bureaucracy, sometimes it is because you can't afford it. Your interest rate may easily be double that, the owner is probably going to want the balloon payment in 5-7 years also. The down payment isn't completely awful, but..... you don't have it. It may be a case where you need to take a breath and save more.
@Aaron K. I have the option of a personal loan to secure the down payment. I am hoping by shortening the length of time before the balloon payment they will accept the lower interest rate.
@Aaron K. We have agreed to $10,000 down as the only change to the original offer.
@Justin Somersett if that is the case I'm shocked and congrats on getting a private loan with likely better terms than the bank would offer you, well done sir.
The seller is definitely going to want more than 4% interest. Assume that as you ask questions on your end, they are also researching ways to get the best deal, so they may see that on loans like this 8-12% interest is not unusual. They would also want a much shorter loan than 15 years, I would expect that they would ask for a balloon payment in 5-7 years as Aaron mentioned.
Being that you don't have the downpayment isn't necessarily a means not to pursue a deal, but do you have a funding set aside as an emergency fund? Figure that when you walk in the door (any door) there will be things that need to be upgraded/replaced.