Hey folks, I've done a little bit of reading on it from various websites, but would to know if folks have experience with this. Basically I'm thinking about selling a house in this bad market, but most buyers are not able to put the 20% down to make the down payment outright and then are subject to the dreaded PMI.
However, the PMI insurance companies have been rejecting people left and right because they are scared off with our nation's credit mess. Since there are only a couple of PMI firms that all the major lenders use, if someone is rejected by one company, they're rejected basically all of them if they cannot secure a regular 20% down loan (even if they re-applied).
But I'm wondering about doing this:
1. Potential buyer puts say 15% down
2. I cover the other 5% via seller financing
3. The bank puts up the other 80% and hence the mortgage that the buyer has to pay for the next X-amount years of his life
What can I do (legally) to protect myself from point #2 if the buyer defaults? I know I can charge interest and basically act as the PMI insurance and get a decent return back on my money as long as the buyer can still afford to make the payments (it would be have to be a short term loan).
What about the original property itself, could I legally have a right to a "portion" of the property if the buyer defaults? Or does the bank now technically "own" it outright and then can foreclose on it and leave me out in the dust (even if the buyer still owes me money on the loan)?
Have lots to learn and thanks for reading this.
- wilkens21
However, the PMI insurance companies have been rejecting people left and right because they are scared off with our nation's credit mess. Since there are only a couple of PMI firms that all the major lenders use, if someone is rejected by one company, they're rejected basically all of them if they cannot secure a regular 20% down loan (even if they re-applied).
But I'm wondering about doing this:
1. Potential buyer puts say 15% down
2. I cover the other 5% via seller financing
3. The bank puts up the other 80% and hence the mortgage that the buyer has to pay for the next X-amount years of his life
What can I do (legally) to protect myself from point #2 if the buyer defaults? I know I can charge interest and basically act as the PMI insurance and get a decent return back on my money as long as the buyer can still afford to make the payments (it would be have to be a short term loan).
What about the original property itself, could I legally have a right to a "portion" of the property if the buyer defaults? Or does the bank now technically "own" it outright and then can foreclose on it and leave me out in the dust (even if the buyer still owes me money on the loan)?
Have lots to learn and thanks for reading this.
- wilkens21