Finance Questions - Seller owns free and clear - Posted by Adam (BatPro)

Posted by Sam Sadat on January 04, 1999 at 18:43:52:

Ask the seller if he would be interested in financing a first mortgage with no monthly payments for a year or two. The interest will accrue for the period, however, and the principal and accrued interest will be all due and payable at maturity. By then, you’ll have obtained a conventional loan to pay him off.

Finance Questions - Seller owns free and clear - Posted by Adam (BatPro)

Posted by Adam (BatPro) on January 03, 1999 at 21:49:03:

I posted “Creative Ideas needed from Creative Minds! - BatPro (Adam) 20:50:05 1/02/99” regarding ideas on how to structure a creative financing deal on a duplex where a 72 year old man lives in. I want to live in half and he wants to live in half until he has to go to a nursing home.

I would like to live in half with low to no monthly payments and need to keep down payment low.

I was wondering about a seller carrying all or part of the financing. I am not sure how this works exactly or how to actually set it up.

I am going to talk with the owner and need some creative ideas in my mind.

Thanks for any advice.


Re: Finance Questions - Seller owns free and clear - Posted by Irwin

Posted by Irwin on January 04, 1999 at 22:49:56:

My creative idea would be something along the lines of giving the owner something now for his equity, plus let him retain a life estate in one half of the property so long as he continues to live in it.
When he goes to the nursing home, he might then be elibible for medicaid. The double would be yours free & clear.
You would both have to work with an attorney to plan for the future. But this could be a win/win for both of you if it’s done right.

Re: Finance Questions - Seller owns free and clear - Posted by Kristin Stallworth

Posted by Kristin Stallworth on January 04, 1999 at 14:01:14:

While I don’t have any ideas for a deal with no monthly payments, I do have an idea for no down. Does your state allow reverse mortgages? (this is similar)
You could agree to give the seller a monthly allotment and then a lump sum at such time as he needs to move to a care facility.
It could be structured as a higher monthly payment to him with no lump sum, or a lower payment with a lump sum at the end, like a balloon note. He would need to sign a warranty deed and you would need to sign a lease which allowed him possession of his half until such time as he is unable to occupy the property. Make sure that the lease agreement is structured as non-transferable, so that his heirs don’t try to occupy or rent that other half after he leaves.
I suppose you could present the idea to him with no monthly payment, but a lump sum when he leaves, but someone is going to have to pay taxes and insurance at the very least. At the time he moves, you could then take out a mortgage to cash him out, which would allow him funds for his care expenses. If you structured this as a lease option, you might be able to get full credit for any monthly payments made credited toward your down payment on the mortgage you would take down the line.
Just some thoughts off the top of my head… I’m sure others will be able to provide you with more.
Good Luck!