80/20 loan

[tmarc]

Hello,

I have a house that I will be selling and was wondering about an 80/20 loan. If I advertise that I'm willing to carry back a 20% do I have to collect it or can I forgive it? Can I also not forgive the 20% loan and not collect a payment and wait for the homeowner to refi it and collect it then down the road? Is offering the carry back a good tool in selling the home. I owe about 72000 on the house and it will appraise for about 95000.

Thanks,
Todd

[kdhastedt]

Todd,

That's not really what an 80/20 loan is.  An 80/20 is where the buyer gets a first mortgage for 80% and a second mortgage (sometimes from the same lender) for 20% so that he doesn't have to pay PMI...you can hold the 20% if you want to but that will tie up 20% of the price (probably all of it from your profit) and subjects you to risk that the buyer won't pay back.  

This might make some sense if you're going to be hit with capital gains.

Why would you forgive the 20% loan?...why not just set your money on fire?...it would be quicker.

If you have that much free-play in the deal, just take a lower offer from someone that can do 100%.

Keith

[tmarc]

Keith,

Thanks for your response. What I wanted to do is with the 80% loan is pay off what I owe and the 20% that I will carry will be cash down the road. I have already cashed out 80% of the homes equity. I was willing to carry the other 20% which will be a nice paycheck when the new owner refi's down the road.

Thanks,
Todd

[Propertygirl]

Todd,
If your buyer "qualifies" for an 80/20 from the bank why would't you just get cashed out at the table?