How to structure financing

[youngone]

Hello, I wanted to know how can I structure an owner financed note with a seller, so that they will be protected if Worst case scenario, I ever defaulted on thier mortgage with me.  Situation: House for sale @ 200k
Owner will finance 80k
Bank loan for 120k
Price on contract with bank 120k
Separate note with seller 80k
How can the seller be protected if the deal was structured this way. knowing that the bank has rights to the property as well, if I default, Which I don't intend to do. I spoke to a mortgage broker that said it can be done, but just don't let the bank know of my and the owners agreement. So how can the owners 80k interest in the property be protected.
Thank you, Youngone

[mweiss1031]

The mortgage broker is asking you to commit fraud, plain and simple. Sounds like someone motivated by his/her commission.

Lets see, the purchase price is 200k? You are getting a bank loan for 120k? The seller is holding a 2nd mortgage for 80k? Why lie? The deal is straight forward. No need to complicate things.

If the lender won't lend 120k on 200k purchase price, find another lender.

PS - what is the seller protected from if you lie to the 1st mortgage holder?

The seller is protected by the value of the property. I would question to see if the property is really worth 200k. The second mortgage is recorded to protect them.

Don't mess this up. Its too simple.

[youngone]

thank you, I will look fora lender that allows me to have a second mortgage with the owner.

[mweiss1031]

You are not following me.  The 'lender' is lending 60 percent of the purchase price. 120/200 = 60%

"Allow you" is the wrong way to look at it.  Their position is VERY VERY secure.  Most lenders would love a 40% cushion.

For example, I am a private lender. I lend to 75% loan to value. I lend with a 25% cushion! I don't have PMI, or VA or FHA insuring my loans.
I don't care about the credit, debt ratio, time on the job, etc. None of that stuff matters when I have 25% equity above my loan. I hope you don't make your payments. I get to foreclose and take the property.

If you have a decent credit score, ie. >620, you should have lenders competing for this loan. Don't beg, don't even ask twice. If they won't do the loan your way, its the highway.

Please don't take this as a brow beating. Its not personal. Your attitude towards institutional lenders needs to change NOW.

I hope you get my drift.

[youngone]

Ok I get your drift,  and My credit score is in the low 700's. Therefore I will have no problem obtaining the financing from another lender than the one I was using. As soon as I get the contract signed I will shop around for a lender that will provide the best rate.  Thank you, Youngone