Having trouble with bank refinancing in a seller finance deal?

[Jimmy Lieu]

Hello BP community,

1. If someone sells you a property with seller financing with an inflated (a way above market value) price, how can the you, as the buyer, be screwed from not being able to get bank financing? Is it because at the end of the balloon, the bank won't provide financing because I will need 20%?

2. If you have a 5 year balloon payment, should I try to refi out as soon as possible? Or after finish the rehab process? Or try to maximize the time out as much as possible and refi near the end of the 5 year balloon?

Thanks!