HELP !!! Seller ‘carries back’ second Mortgage. How ???

Posted by admin on July 26th, 2007 at 12:35pm

Q. I’m not so clear on this and would like to hear some imput from anyone who might have been involved or even understands such a transaction. If you want the seller to ‘take back’ a second mortgage, as money down for example, how will this work? First off all, I suppose you assume that 2nd M an make payments, BUT, do you have to qualify for the bank to allow transfer of this 2nd M. What about the bank financing your first M, what happens when they get wind that you’re buying the property with the 2nd on it. OR is the assumption of the second M automatic ?

A. Ordinarily, if the 1st TD is assumable, it is assumable only after credit approval. This approval MAY include verification of assets to determine the availability of funds for a down payment. If some of the down payment is coming from a seller financed (or any other source) 2nd TD, it may affect the buyer’s ability to qualify for the assumption of the 1st TD. The lender will look at total buyer equity and also total buyer monthly payments. It is dangerous to generalize, but many seller financed loans are payable interest only with the entire balance due in 5-10 years. Others are payable on a 20-30 year amortizxation schedule, with the remaining balance due in 5-10 years; but, of course, the terms can be anything that is agreeable to the parties. .

Under Mortgage