Is seller financing a good Idea?

[Alex Schar]

I initially wanted to house hack a multifamily property on an FHA loan for my first deal, but I came across a duplex that has one half already renovated and the other half with lots of cosmetic issues. The seller will only accept seller financing and their terms are "

Sold as is, seller will do no repairs. 30 year term 8.9 percent interest. Buyer pays all closing except title policy. 10 percent minimum down payment. Loan must be escrowed and buyer pays loan servicing fee of thirty five dollars per month to a third party servicing company. No existing survey.

Should I just stick with FHA? I can get in with a lower down payment elsewhere, and get a lower interest rate as well. Also are seller finance deals re-financeable? I'm very knew to real estate, and still learning. Also what should I expect for closing costs to be? 

[Robert Iovine]

Alex, 

The current 30 year fixed rate is 2.7%, your seller is asking for an additional 6% in interest. Additionally, an FHA can be obtained with a minimum of 3.5% down. Your seller is asking for 10%. The more cash you have to give as a down payment will limit the funds you have to do the required improvements.

I'll second Jaron's statement that this is most likely more then just a cosmetic remodel. The seller most likely knows that the home will not appraise for the sale amount or would not qualify for FHA because of needed repairs.