OfflineHello.... I have a question of how exactly an owner carry deal works... I know the basics being that based on the contract, there is an up front down payment... A set monthly payment... And a final payoff amount...
I have read some blogs on here that some have completed deals like this with absolutely no money out of pocket... And how they set the whole thing up with the seller basically giving the wholesaler a seperate contract and the wholesaler gives the buyer a different contract... All in turn the wholesaler uses the buyers money to pay the seller... And thus, makes money three different ways....
My question is.... While doing this, who carries and pays all of the "PITI" Costs?? Is it the seller?? Or the wholesaler??
Please help...
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"Whatever I will become will be what God has chosen for me." –Elvis Presley
The buyer is responsible to pay the costs. You are the owner.
It is the same as getting a bank loan except the seller is the bank.
You can negotiate any terms you want. How much, if any, down payment, length of the note, interest rate... That is the beauty of seller financing. You are not bound the federal regulations of a standard mortgage.
I would highly recommend using a third party escrow company to collect the payments. It gives you a solid, neutral payment record. This will prove to be very helpful if and when you refinance it. Banks look at a verification of mortgage from the third party favorably, where as if it is just another person telling them you paid on time, they tend have the attitude the seller just wants to get rid of the note and will say anything to do so. You want verifiable documentation of everything.
Good luck,
Jim
Hey Jim... Thank you for getting back to me on this...
So, if I was to go through an escrow company.. Does the buyer pay these "PITI" costs to the escrow company or to the seller?? and does the escrow company hold the title until the said note "expiration" date?? and last.. is there a cost to use an escrow company??
Thank you very much for your assistance on this.. I just got word today that my offer was accepted and I am hoping to put a family in this house that needs to be carried for about a year...
Sincerely,
Eric Perez
**Follow my success in this "30 Days To Real Estate Cash" journey I am on by reading my blog on my profile page....
****Visit my websites at www.p-rproperties.kwrealty.com and at http://p-rproperties.yourkwagent.com
"Whatever I will become will be what God has chosen for me." –Elvis Presley
Way to go dude. Make that money man. LOOKOUT PUEBLO ERICS IN TOWN lol......
Hey do you attend any rei club meetings ? I see there are some in Colorado Springs.
I talked to Ms. Procter she was very kind and said the info is current.
Pikes Peak Landlords & Investors Group, Est. 1981
Contact: Ann Procter
Telephone: (719) 684-9010
When: 2nd Tuesday of each month, 6:30pm to 9:00pm
Where: Senior Center of CS, 1514 N. Hancock
(Cross Streets: E. Unitah & N. Hancock), Colorado Springs
Read more: http://www.creonline.com/co.html#ixzz2jKcwdq7r
The escrow company will set it up however you want. If you just want to make the principal and interest payment and you pay for the taxes and insurance yourself, they will do that, or you can add the tax and insurance with the payment. You may have to calculate what that additional monthly cost is. I would ask your title company to help you calculate the full PITI cost.
Yes there is a cost to the escrow company. It is minimal. I think the one I use in my area is about $20 per month. There is also a set-up fee of around $100. Your area could have a different cost structure. You will have to ask.
You can always ask the seller to pay the costs, or at least split them. Start by asking them to pay and go from there.
As far as title goes, you should get a Warranty Deed when you close. This transfers title to you. You will get the deed when you pay it off, or it will transfer to the bank you refinance with later on. But, you do take full ownership of the property.
Congratulations, on getting your offer accepted.
May you have a long and prosperous career,
Jim