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elliemae
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2010 Dec 31, 9:35am
If she really wanted to get rid of the place and you really wanted to buy, she would finance the entire loan. But she smells a sucker and figures you'll want the place so badly that you'll overlook the total idiocy of financing with a 3 year balloon when you don't qualify for a loan now.
Things are tight (qualifying for loans), and are just gonna get tighter - what are you gonna do in 3 years when you have a huge balloon payment due, you're upside down (could easily happen) and she gets her place back, less the down payment and the interest/principle you've already paid?
B.A.C.A.H.
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2010 Dec 31, 9:37am
Things are tight (qualifying for loans), and are just gonna get tighter
Who's problem is that? - the buyer's or the seller's?
I think it is the seller's problem.
elliemae
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2010 Dec 31, 9:38am
Not if he buys now & doesn't qualify for a loan in 3 years. He loses.
B.A.C.A.H.
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2010 Dec 31, 9:44am
Not if he buys now & doesn’t qualify for a loan in 3 years. He loses.
Interesting.
I assumed that Waitingtobuy is a she, because the expression "we lost the house" during bidding frenzies was usually said to me by a woman.
Not a statistically significant sampling though, could just be a coincidence.
No, sybrib, Im a man. Project much? I've been at this since August and no, I havent panicked once during the process and have been extraordinarily patient. The reality is the place is a very good buy, priced 20% less than anything around it. There just arent a lot of places priced at $850K selling due to stricter underwriting.
As for being a sucker, elliemae, you will notice my hesitation specifically because of the balloon payment. I doubled my money on the last place I sold and have been keeping my powder dry for the right buying opportunity. I wasnt born yesterday.
I will probably wait until I file my taxes for 2010 to qualify for a traditional loan.
B.A.C.A.H.
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2011 Jan 1, 5:38am
Anything that has been for sale since August is not priced to sell.
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I have posted here before. I found a very good deal in Redondo Beach, almost 3200 sq feet with an ocean view, at $850,000. This works out to $267/sq foot, well below market value here. Place is where we want, only a few blocks from where we are now, and the home was nearly totally renovated.We have agreed on everything; just waiting on a loan.
Started the process at the beginning of August and was turned down by my first lender 1 week before closing, which was ridiculous. I was turned down because the business that I own had a loss in 2009 (I took a large pension expense). Otherwise, the business is solid. I have plenty of assets, enough to pay for the home for at least 5 years if my business went under, which it isn't. I recently thought I had an approval from another lender, whose first underwriter said yes and the second underwriter, a week before closing again, said no. (I sadly expected this based on my last time around).
The second broker said because 2010 was a good year for my business, I will easily qualify for the loan since the reversal in my AGI is more than $80,000, keeping my DTI ratio in line.
The seller really wants to get rid of the place since it is not occupied and it is burning a hole in her wallet. She is taking a substantial loss ($350K). She wants to do owner financing for either the part of the loan I don't qualify with the bank for right now, or the entire amount. There is a balloon payment due in three years (I don't like this); her thinking is I should have no problem qualifying for a loan in the next six months to pay off her loan anyway. It is an interest only loan, which lowers the monthly payment, which I don't like, and I would have to put the 20% down.
I dont have an agent as I am dealing directly with her. (she is an agent and has been great)
My gut reaction is to say no and wait this out until I qualify for a loan when I can file my income taxes in mid February. If the house is still around, great. Otherwise, I could lose out on the place.
What are your thoughts? Do you have experience with seller financing?