Seller Finance --- Help Needed

[Marc L.]

Back story: August 2011 my family moved from TX to MS. My dad had moved from MS to TN and his house in MS had been on the market but not selling. He agreed to sell us his MS property at no interest so that he wouldn't have to deal with property maintenance and taxes. I felt the price was fair and no interest sealed the deal. We had a local attorney do a Land Deed of Trust and Installment Promissory Note...total cost $300.

It's now 1 year later and my city wife has decided she can't take the country life. We are moving back to TX and need to do something with the house in MS. Knowing that my father sold it to me as a mutually beneficial transaction, I felt obligated to offer it back to him with him keeping my equity and us paying the taxes for the year. He made it very clear that he does not want it back under any circumstance and prefers that we just continue paying the monthly payment.

I have talked to the local realtor (yes...only one) and checked the local listings to see what comparable houses are selling for. I am concerned that after realtor commission we will not be able to sell the house for the payoff amount and am pondering the possibility of seller financing. I don't need the lump sum payout. I only need to cover my promissory note and get out from under the taxes and insurance.

Questions:

1. If we go through with this, would we be able to handle the paperwork the same as the original contract between me and my father...Land Deed of Trust/Promissory note? Or are other complications at play due to the wrap or non-familial sale?

2. Are there standard, accepted terms regarding down payment, interest rate, or term of loan? I had read several places 8-12%, but the posts were old. I don't know if that is based on current interest rates at the time and apt to change.

3. I think I grasp the concept of the balloon note, but what happens if the buyer is still unable to get traditional financing at the end of the period?

4. It appears that foreclosure processes vary from state to state based on contract type. Have I provided enough information for anyone to tell me what my foreclosure process would look like in MS...if the situation arises? Cost, time?

5. What do I do with the down payment? I'm envisioning having it in a savings account to use if things go south to cover foreclosure or property damage costs. Is that reasonable and/or customary?

6. Is there anything else I need to be concerned about?

I apologize if this post got a little lengthy. I debated whether to break into shorter posts. If there is any online reading that you can recommend that can answer my questions, feel free to throw it out. This forum seemed to have the most understandable, newbie friendly posts, so I'm looking forward to your replies.

Thanks in advance!