1st Deal Done...60 thous. cash back...now what type of financing

[SURGERYGRL]

Well my very first deal is done. Purchased a house with no money down for 380,000 purchase price.  320,000 to go to the seller with 60,000 back at closing.

Okay here is my question. This is a 4 yr old high dollar home in TN next to the lake and i thought about selling on installment contract.

However, it was brought to my attention that since I actually have a mortgage on the home I cannot file a signed and notorized land contract at the court house due to the possible trigger of DOS.  Also the purchasers of the land contract cannot reap the benefits of tax write offs.

 Is there any way around this?

My thoughts were to sale on installment contract at 2 to 3 points above the average interest rate and enjoy the benefits of the interest payments along with the knowledge of not being responsible for maintenance and repairs.

My other thought of course is Lease Option. I am not sure of the market for such a high dollar home on this type of contract. Also having tenants that lease, I would be responsible for all maintenance and repairs.

What thoughts are out there?

Thanks,
Lori

[$Cash$]

SURGERYGRL,

Glad to meet you.

First when you do a Land Contract or Contract for Deed it is not neccesary to file the contract.  If the contract is for obtaining the deed or lets say re-financing your loan at a later date then, what this means is that the buyers do not get the deed until they fulfill the terms of the Land Contract.  This is done this way pretty much as an industry standard.  Since it is not filed then your concern over the acceleration clause is pretty much nill as only you and your buyer know.  Tell your buyer the deed is held in escrow until they fulfill  the terms of their contract with you.

Second your buyer can claim the mortgage interest on the Land Contract which is a valuable selling point. I recommend using a Loan Servicing Company who will handle the collection of the payments from your buyer, make the payments to the mortgage company, set aside the amount you will receive over the current interest rate and issue a 1098 to your buyers at the end of the year so your buyers can claim the interest they paid.

By selling this way your buyers feel the pride of home ownership and will take the responsibility of maintenance of the property, plus I have found they make improvements to the property.

John $Cash$ Locke  

[cparobbins]

What is your end buyer's credit situation? What is the LTV?

Why can't you set the deal up as seller financed (with you being the seller/lender) and then sell the note at the closing table?

This way your original seller gets paid off, the underlying bank gets paid off, you get paid off, and your buyer owns the house.