Owner finance offer on my property

[Ben M.]

I have an owner finance offer in my property below and not clear how this would work.

1) Are they saying that I will be fully paid in 5 or 8 years? So the monthly payment would change later on? I guess that’s what the balloon payment is?

2) Will my existing loan be transferred to another provider?

3) I am currently in escrow which includes insurance and taxes, so the buyer should then be paying for the insurance and taxes is that right so I would have to have a different loan?

4) What are some things to watch out for with these types of transactions?

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OPTION 2 (Owner Finance) with a 5-year Balloon Payment:

Purchase Price: $165,000 

Down Payment: $37,000

Terms for the remaining Balance: Seller to carry back balance @6% APR with Monthly Interest and Principal Payments of $767.42 with a total amount of $205,155.02 being made in 5 years by Seller.

Amortized Over 30 years with a 5-year 

BalloonBuyer Pays all closing costs

OPTION 3 (Owner Finance) with a 8-year Balloon Payment:

Purchase Price: $170,000

Down Payment: $45,000

Terms for the remaining Balance: Seller to carry back balance @ 8% APR with Monthly Interest and Principal Payments $917.21 with a total amount of $246,700.62 being made in 8 years by Seller.

Amortized Over 30 years with a 8-year Balloon

Buyer Pays all closing costs To close in 30 days or less.

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[Jeff Copeland]

How much do you owe on the existing mortgage? Unless you can pay off your existing mortgage with the down payment of $37k or $45k, you can't really seller finance this deal (at least not without a much more complicated wrap or subject-to arrangement). 

Check out https://www.biggerpockets.com/... for a detailed overview of seller financing. 

Assuming you could pay off the existing mortgage and seller finance it, you would no longer be responsible for the taxes and insurance, because you would no longer own the property.