Loan reporting on a private mortgage

[Isaac Frost]

Hello All,

We have a new property that will become our primary residence. I am building a new house on the property from a cash out refinance on two SFR rentals we have. We currently borrowed money for the property (land) with no payments until the house is complete (from family member). Upon completion I would like to owner finance with a down payment and 30 year AM with the family member.

My question is; How is this reported on title documents or credit agencies etc.? In an ideal scenario it would appear that we own this property free and clear and I could get a larger HELOC against the appraised value and leverage that cash on other rehabs/flip projects.

I would expect there are some safeguards to prevent someone from sucking too much cash out of an owner financed property and getting upside down to a bank AND private lender.  From my perspective it seems like a great way to reduce debt to credit ratio and open up some other creative financing options.