Owner financing question - California

3 Replies

Hello just looking for some information if anyone can help... I’m buying a home from a family friend and she’s going to be “holding the note” she’s giving us a 3.1% interest rate and it’s gonna be a 30 year mortgage. She’s going to hire a lawyer to do paperwork and such but my question is regarding property taxes since she has owned the house for 50+ years her taxes are minuscule... when I start paying her on this mortgage will the property taxes go up due to sale price (283k$) or will she assume taxes still and I just pay to her because my understanding is the deed will stay in her name until the loan is paid off. And also she was planning on me getting my own home insurance and it being in the contract that I must keep home insured through life of loan. Another question is with a loan set up like this will I be able to get home equity type or home improvement type loans since the house does need work. Thanks for any help ahead of time 

@Richard Reyes

The title should change to your name and she should have a lien in first position on the property to secure her note. The property taxes will be reassessed when you assume ownership. Homeowner's insurance should be in your name with her as an additional insured as the lender.

Also, if you are close enough that she's going to carry you for 30 years at 3.1% you might be close enough to just keep it simple, write your own promissory note and walk down to the title company and get this done.

That’s the plan to write our own promissory note and such but it won’t be a trust to deed type of deal? Where’s it’s in her name until I pay it? And when the taxes get reassessed does it just go off of sale price?  

@Richard Reyes

I think the deed of trust will be recorded to secure her first lien position on the property, but don't worry about those details. I'd just write the details of your promissory note and call a couple title companies to get some quotes for doing the work and let them worry about the details.