Second mortgage for the home seller financed?

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I read the advice hier.Meine wife and I are planning a house in Indiana for our parents to buy them, even without a mortgage. We intend to allow parents to finance the sale to us (at a reasonable price, the rate of IRS-approved). The current value is approximately $ 350K. The house is 20 years. It should be habitable, but needs repairs (roof, carpet, new mechanical, cosmetic corrections, etc.), rapidly rising in value by 10-20%. We intend to buy the house, as it is. We have $ 30K for Reparaturen.Unmittelbar after (or during if possible), we want to renovate the kitchen and bathrooms. We’ll probably want to take a loan (5-20% of the value of the house) to do. Parents have no money, so we are looking for a kannst.Was mortgage is best for the second loan? We do not want to pay PMI, or other unnecessary fees. We have decent credit, 690-710, a low DTI ratio, and healthy financial Reserven.Jede other general advice is greatly appreciated. Thank you, I saw that suggest some answers HELOC. I do not think I’ll take the significantly higher rates. Is not it a 2nd Mortgages more sense?
I currently own a house mortgage and tomorrow I’ll make my second home, buy a house next door. How best to fund and there is nothing I have to be careful when signing. My concern is, finacial, the best kind of loan rate and interest. I have already said, it is sort of an investment loan, even if my daughter is there with his family life can not be borrowed initially that my wife and I are

5 Comments
  1. Reply
    RM
    February 18, 2011 at 1:07 pm

    I would make the upgrades you talked about- roof, carpet, etc and get the house re-appraised.

    If the value goes up as you think it will, you can easily get a HELOC (home equity line of credit) from a local bank at a decent rate. You can take out as much as you want as you need it, usually can go up to 80 or 85% of the value of your home (combined with the mortgage you will already have). They have very little costs associated with them to start up, and you can keep them open forever and use it for emergencies and other things.

  2. Reply
    brandonbroker
    February 18, 2011 at 1:30 pm

    The best way for you to do this since you have good credit is after you close the loan with your parents is to visit a local bank and apply for a HELOC. Home Equity Line Of Credit. You may want to call your local bank first to make sure they won’t have a seasoning issue. If you buy a house for 350k thats what it’s worth according to the appraisal. It does not matter if it’s worth 700k, it’s only going to appraise for what your paying for it. You won’t have to pay PMI on a HELOC. That would only be on the first mortgage and it’s up to the lender if they require it. I’m guessing your parents will let you slide on that one.
    Consider a gift of equity in the agreement depending on what the home is worth.

  3. Reply
    newmexicorealestateforms
    February 18, 2011 at 2:21 pm

    Well the “investment type loan” is their way of telling you that you’re not going to get the same rate as if this was a principal residence loan, you will be charged a higher interest.
    You might want to strike a lease agreement with your daughter and bargain with it at the lender to get a lesser rate including offering it as additional collateral.
    Do a little research
    FTC: High Rate – High Fee Loans (know your rights): http://www.ftc.gov/bcp/conline/pubs/homes/32mortgs.htm
    Real Estate Settlement Procedures Act (RESPA) [about closing costs & settlement procedures]: http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
    Mortgage law an Overview: http://www.law.cornell.edu/wex/index.php/Mortgage
    For more research material you might want to visit http://www.realestateformnm.com/ResearchLink.aspx
    I wish you and your daughter the best of luck

  4. Reply
    es
    February 18, 2011 at 3:13 pm

    Go for a fixed rate loan– go for a 30 year loan, even if you pay it off in 15 years, by doubling your payments, you are better off than if you take a 15 year loan, because then you have the contractual obligation to pay it off-whereas with the 30 year loan, you don’t have to make double payments–let’s say that one month you decide to take that extra money to make a repair, or go on a vacation– you are less pressed financially with the 30 year loan. The interest you will save by paying off a 30 year loan in fifteen years is vast. Just make sure you send in the second payment with instructions to “apply the payment to principal, first.” Good luck! Also, make sure there is no pre-payment penalty on your mortgage. The Lender should provide a truth-in-lending statement to you, and you should know all the fees and closing costs in advance. That’s the law. Also, if you are writing an offer to purchase tomorrow, than make sure you put into the contract that if you can’t get the loan, your downpayment will be refunded to you.

  5. Reply
    s f
    February 18, 2011 at 3:15 pm

    I beleive you need to have a John Doe lease made up to show that it is rented or have your daughter sign it. You should be able to get a regular loan at least that is what I have done. When I did not have a lease they did not want to give me a loan without a big down payment. The loan you will be signing should be no diffrent than what you already have. The intrest rate will be a maybe a 7% instead of a 6.

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