How do I get financing for a family to family purchase when I already have a mortgage on my own home? I really want this income property from a relative but how do I structure the deal? Can anyone offer any options?
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Thanks Ibrahim thats a great idea.
Ibrahim Hughes said:
Hi Shar. The creative financing I spoke of was the owner financing. And as Eric mentioned it could be done in a myriad of ways. Basically, your Father would be the lender instead of a regular mortgage company. Let's say for example that your Father was selling the property to you for $100k. You agreed to give him $10k down of your own money and he agreed to finance the remaining $90k at an interest rate and terms that the two of you agreed to. The loan, for example, could be set up as an amortized 30 year mortgage (payments made as if it was a 30 year mortgage) but at the end of 15 years you make a balloon payment and pay off what's left of the mortgage. Or (assuming that you find a lender that is ok with this arrangement) as Eric mentioned you could put $20k down, finance $60K and your Dad can hold a 2nd mortgage for the remaining $20k. A real estate attorney knowledgeable in various methods of financing may be best to advise you on the legal details.
Hi Ibrahim,
My dad owns the property and it is paid for. You mentioned creative financing how does that work?
Ibrahim Hughes said:
If you can not get creative financing, call me at 732 500 7368. I'm a licensed mortgage banker.
Does the relative want to hold the mortgage?? That would be great.
You can also get a mortgage on an income property, and the relative can hold 2nd mortgage.
There are so many ways to do it........
inbox me if you like
EE
Hi Shar. If this is not going to be your primary residence then you will likely have to get a conventional loan, put at least 20% down and pay a higher interest rate than you would on an FHA loan. Your rate will likely be in the 5's. Keep in mind that you will need strong credit and maybe even 6 mos. reserves. Let me know if you want me to put you in touch with my mortgage rep.
On the other hand, if you are purchasing from a relative why not get creative with the financing? Is it a free and clear property? Is she open to the idea of owner financing? If there is an existing mortgage on the property can the loan be assumed?
Ibrahim