Owner Financing Term payable at the end of balloon
Could you advice this Odd owner financing term? I have a highrise condo under contract. The buyer ask for owner financing because they are retired and difficult to get a loan and yet don't want to used up all cash. I am happy to owner financing, not needing money at this point of my life. They have perfect credit scores 830 and 790 ( I received the credit reports) (They are a retired couple 69 and 62 no children). They also are living in the same building for many years. they want to buy several units for investments. In a nutshell they are credit worthy. The current term is $184,900, 10% down, 7.75 %, 5 yr ballon, 30 yrs amor. It is scheduled to close at the end of month and title company is still getting the condo transfer doc ready. There are realtors on both sides. But I have good open communication with the buyers directly.
A crazy idea came to me today. I am still working, not needing monthly income, do you think it is ok to propose change the term to receive one payment at the end of the 5 years (say the 90% principle plus the interests compound yearly)?
This benefits them that there are no monthly payment, reduce their hassle of managing payments. Do you think I can justify that asking a little higher interest rate say 8%? Am I nickel and dime ? This will be my retirement saving plan. (and try not to spend it yet)
Am I taking too much risk by not getting payments for 5 yrs .till the end? knowing they are getting the title from day one and I get a promissory note? The only assurance are that 1. title company handles the transaction so it will be recorded 2. I know they have some financial base 3. They have good scores. and they have a unit in the building already. 4. I will get the 10% down to start with.
What do I need to look out for? What if they want to pre- paid a big chunk during the 5 yrs term? Do I need to give them incentive to let the loan stay unpaid till the end and let it generate interest for me?