Junior Mortgage

2 Replies

I am considering selling my property to the current renter for a discounted price and carrying a junior mortgage for them. I don't know if their bank will agree to this or not and looking for some advice. I would like to sell the property to the current tenant though they were approved for 20K less than what I was going to list the property for. Any suggestions on this topic would be great. 

I'm confused on the numbers.  How about some numbers, please?

What's it worth on the open market, and what are you proposing to do?

For instance, let's say it's worth $150,000.  The bank will only approve them for $130K.  Are you proposing that you then give them a 2nd mortgage for $20K?  (Not putting in down payment money in the equation for simplicity.)

That would make sense to me.  I just want to be sure you're not proposing to give the property away.

The downside to this, would be that if they end up in foreclosure, the bank gets first dibs on what they can get for the property.  If there's anything left over, then you get your piece of the pie.

Can you just owner finance the whole thing?

Yes more information is needed. As far as the bank allowing you to put 2nd on title, they can't say anything about that. 

I like what Sue Kelly said, can you finance the entire thing and ask them to come up with enough cash for the equity you would pull out?

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