help new investor - Posted by Divyesh

Posted by kaattan on August 11, 2001 at 01:09:26:

I am also 1 month new in this and this may seem like a blind person helping another blind person to see.
So, I hope someone will confirm these.

Mortgages are first and second based on the order they are filed at the public records (at the recorder’s office in the county court house; this is done during closing or just after). It does not matter how much amount is due on them. Typically, institutional lenders will almost never agree to be in a junior (second/third) position. (You may be charged 16% or higher). This is because in the event of a foreclosure, mortgages are paid off (couldnt think of another term) based on their position. Second and third mortgages are at a higher risk of losing money.

To answer your question, “to have the seller take back a second mortgage” means that you need to give the seller a promissory note secured by a mortgage on the property you are buying just like you would do with a mortgage bank (kind of difficult to find such a seller-remember seller wants to get rid of the property you are buying).More often, the note is usually secured by equity in one of your own assets.

There is also what is known as a “wrap around mortgage” and requires the existing mortgage on a property to be assumable. You give the seller terms such that your payments cover payments on the mortgage the seller is holding. A seller would do that because

  1. He can get positive cash flow without the trouble of property management
  2. Equity build up.
    It works like an income+growth mutual fund

Hope this helps and is correct


help new investor - Posted by Divyesh

Posted by Divyesh on August 10, 2001 at 12:54:36:

Hey everybody
I am the new in this field. please help me understand this terms. I donot understand how this works “obtain the second mortgage from seller” what does that mean. please any one can explain in detail. well seller get the second mortgage and he will pay the payment on the mortgage and why will he do that.