Seller Financing to Mortgage

[Jacob Wiltshire]

Hello,

So I am looking to do a deal with seller financing. It's looking promising. My question is at the balloon time can I refinance into a mortgage using appraised value or does it go back to purchase value for a banks LTV?

Example if the house I purchase is worth $90K but I agree seller financing at $62K, when I get to the ballon can I use the equity difference in my loan amount to the seller and the value of the building as the down payment?

[Lucian Guadagnoli]

Hi @Jacob Wiltshire!

From what I understand, the banks use the appraised value of the property, not the purchase price of the house, as the 'value' in their LTV. If the bank appraised the property at $90k, and is willing to loan up to 70% LTV, then they will offer up to $63k.

I'd be interested to know, however, if there is a best practice around how much time you should give yourself before the balloon payment comes due to refinance.