I have just begun owner financing.  Just closed a deal with the seller financing the buyer's purchase.  Used a rate of 6%.  I repesented the buyer, so 6% was fine.  If I had represented the seller, I would have wanted a higher interest rate.

You know how it is easy to do for others, but difficult for yourself?  I need to finance my own listing of an investment house.  Most of those interested can't qualify easily, but can afford the monthly payment of principle, interest, taxes, insurance.  If this is with a 3 year balloon, and interest rates seem to be going up, what interest rate would you suggest I use?  How much of a down payment on a $225k house?

Do you use asking price or appraisal in this situation?

Would someone explain Owner Financed Note?

Thanks in advance for your responses.  This is helpful.

I was wondering if there is anyway I could get some feedback on the following situation?

Over the last few months I had entered into a sales agreement for the purchase of a Condo-prior to closing my lender had discovered the property could not be financed due to Federal lending Guidelines-an investor owning more the 10% of the complex. After a ton of research, I discovered the only way to financing the property would be to use seller financing or buy with cash (not a possibility.) I analyzed the situation thoroughly and feel that the purchase price is low enough I am comfortable taking the risk of utilizing Seller Financing. The Seller has written a contract and I am now a little confused and am not sure of what it means exactly-or the implications. I have a Broker I am working with and he does have a degree in Real Estate Law but could only give me so much advice as my agent. The following is the Sellers Contract as well as my revised proposal to send him. Any help is much appreciated-I am at a loss!

This would be a contract sale to the buyer under the following terms:

-Price: $89,900

-Down Payment: $4,500

Loan: $85,400, 6%, interest only until July 2010. (that is when my loan goes variable)

-Close Date: On or before April 29^th 2010

-Buyer shall refi and officially close with transfer of title by July 2010. Sale terms at that time will be:

            1.  Price 89,000

            2.  Deposit: Paid/none

            3.  Closing costs: Per local custom (no credit of $3,500)

            4.  Includes furniture

            5. Title shall transfer

- Buyer shall pay Seller for all associated ownership costs, increased costs or special assessments (Taxes, Insurance, HOA etc.) Seller shall then pay all costs for Buyer. (We can set up an Escrow account if necessary)

-Total "all-in" monthly payment to seller will be $900/month

-Buyer to pay direct all utilities, cable, services and any repairs to the unit

-Buyer will maintain the unit and furniture in clean standards. Seller (or Seller's agent) shall have the right to inspect unit one time per year or more frequently if there are HOA complaints.

-We need to investigate if the Buyer will need additional insurance for contents-I will call my agent tomorrow

-Should Buyer default on the agreement, Seller will give written notice and will enforce remedies + penalties If Seller has to evict, deposited is forfeited

-Should Sellers lender, HOA or any other entity created/file a default due to contract sale, then Buyer will get their deposit back and Buyer will move out.

-If Seller defaults on agreement then Buyer will get their deposit back

-Buyer to allow Seller to run Credit Report and Background check

-All other terms to be detailed after discussion with Attorney

 Revisions to Contract Sale: 4/16/10

1) Price: 89,900

2) Down payment $4,500

3) Loan: $85,400 Interest rate ½% above Sellers current interest rate

4) Close date-On or before April 29^th

5) Buyer to refi and officially close with transfer of title by July 2020-Buyer will be responsible for variable after July 2010. Sales terms at that time will be:

            A) Price $89,000 less Principle balance made to Seller

            B) Deposit (Down Payment) Paid/none

            C) Closing Costs: per local custom

            D) $3,500 credit fro Seller

            E) Includes Furniture

6) Buyer shall pay Seller for all associated ownership costs, increased costs or special assessments (Taxes, insurance, HOA etc) Seller shall then pay all costs for Buyer (We can set up an Escrow account if necessary.)

7) Total "all-in" monthly payment to Seller to be $733.33 a month

8) Buyer to pay directly for any utilities, cable, services and any repairs to the unit

9) Buyer will maintain the unit and furniture in clean standards. Seller (or Sellers agent) have the right to inspect unit one time per year or more frequently if there are HOA complaints

10) Possible content insurance, Seller Contacting Agent

11) Should Buyer default on the agreement, Seller will give written notice and will enforce remedies + penalties. If Seller has to evict, deposit is forfeited

12) Should Sellers lender, HOA or other entity create/file a default due to Contract sale, then the Buyer will get their deposit back       

13) If Seller defaults on agreement, then the Buyer will get their deposit back

14) Buyer to provide a recent Criminal History Registry and Credit Report from UMPQUA bank

15) All other terms to be detailed after discussion with Attorney

16) Seller responsible for original agreed upon Buyer/Seller Broker Commission

 Questions:

1) When would first payment be due?

2) Who receives tax benefits?

3) Am I able to rent property prior to obtaining title and/or am I able to rent from Seller if financing is unable to be obtained?

4) How are the fees to the Escrow Company?

 Thanks for ANY and ALL guidance : )