Help! Need advice on creative private financing

[Jeremy Clarke]

Good day!

I am under contract with a non-warrantable condo and am working with my lender on financing options to do a portfolio loan since i can't get conventional (owner occupancy ratios). The numbers with him work alright, but need to pay to buy down points to make my monthly payments somewhat reasonable which i'm asking the seller to pay.

We presented the ask to the seller and the seller did something we weren't expecting next.

Since the seller owns his condo free and clear, he offered to loan me the money. These were his terms 30% down, 10 year 6.5% interest only loan amortized over 30 years with an ARM after the 10 years. Which if i'm doing my math right, makes me owe him roughly $1213 per month for those first 10 years. Personally - I think that is an insane ask and much worse than going with the portfolio loan. But i'm trying to entertain it.

What are your thoughts? How would you counter that, if at all? What are the risks in private lender vs. using a bank?

Appreciate the insight.

Jeremy