Q: If a person can not get a full mortgage for a house there is an option for the person to get a 2nd mortgage from another source or the seller. Is this a common option for someone to buy a house and what are the ramifications?? seller wants to sell house for $235,000 but buyer can only get mortgage for $200,000 what options do you have. The seller can 1) tell buyer to get a second mortgage from another source or 2) finance the $35,000. how will the bank look at this 2nd Home Mortgage or promissory note???
A: It is relatively uncommon in residential transactions when homes are selling well. It becomes more common in buyer's markets when sellers must compete harder for buyers. The limitation is that most sellers don't understand the situation all that well, and prefer a clean cash deal, so the choices are limited. The other limitation is that a second mortgage will usually be for a shorter term - 1, 5 or 10 years - - much shorter than most conventional bank mortgages. Yes that is true. For some reason though, the first mortgage lender will be concerned about the second mortgage, and may count that as debt when determining the buyers' ability to pay the first mortgage. It doesn't make sense, but they do. Most will look at it as they would other debt or as housing debt. Of course, since their position as first mortgage holder is really not affected, they are sometime more lenient about allowing this sort of debt. You may have to look around for a mortgage program that fits what you are trying to accomplish.
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