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!

There's a lot more to it than just getting under 2% interest and a longer term. Balloon payments don't bother me. In this example it would though. Yes, I can offer over PV and win big short and long term. It's based on a specific strategy I do using seller financing. Not all sellers will agree to my terms, but I don't care...I don't need all of them to agree...all I would need is about one out of every 10 or so, and I'm a "happy camper".

I'm sure there are books that are written about seller financing, but I haven't come across one yet that describes the way I do it. I would recommend Algebra and Geometry.

Thanks for the reply. Yeah, I'm still quite a newbie with seller financing so would love to learn more! Do you recommend any resources or books that helped you get to where you are with seller financing?

Hi Joe, Thanks for the in-depth response. This isn't a real life example - just learning seller financing and trying to understand the refi process! :) Just making sure I understand correctly but you're saying is that it's totally okay paying over PV, but the other seller financing terms would have absolutely make it worth my while for me to pay over PV. For example, it could be like 2% interest or amortized over 40 years or something that really makes it worth it. And the other point you made is that with any balloon payments involved in a seller financing deal, I need to absolutely make sure that I can get to 80% ltv (or whatever % that is to refi out). This should be on the top of my mind before I get into any seller financing deal to begin with! It seems you're not a big fan of the balloon payments - I was told that a 5 year balloon payment is pretty typical for seller financing deals? Do you avoid balloon payments or what do you do exactly? Would love to know a bit more about this What do you mean by "I can pay (and do) over PV all the time...and make a short term, and long term killing" - I'd love to know what terms you really try to go for that make the seller finance deals work extremely well for you! This helped a lot BTW! Much appreciated Joe!

Having trouble with bank refinancing in a seller finance deal?Having trouble with bank refinancing in a seller finance deal?

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Joe Villeneuve

#4 All Forums Contributor

Plymouth, MI

Joe Villeneuve

#4 All Forums Contributor

Plymouth, MI

Replied May 23, 2021 10:45

The bank won't refinance part of a loan. They will want to refi the entire purchase price minus any DP you made. So if your intention was to do this all along, and you paid way over the property value, the bank isn't the one that is screwing you. Take a look in the mirror if you want to see who that person is.

I you paid over Property Value, and you have a 5 year balloon, then you better hope the property appreciates, and the added value from the rehab, increases in 5 years to a new value where 80% (or whatever loan % of the PV you can refi at then) will cover the balloon payment...because that's what you will be trying to refi at that time.

Paying over the PV isn't a problem. The problem is when you added a balloon payment in 5 years to that overpayment. I can pay (and do) over PV all the time...and make a short term, and long term killing, but I don't put such a short term deadline on a payoff.

Please tell me your interest rate is less than 3%.

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