Posted on: 15th Feb, 2009 01:12 pm
I'm about to do a small owner finance option on a towhome. Price of the townhome is $85,000.We, seller-Buyer agreed on the down payment of $25,000 with 8% interest rate for 15 years. My goal is to pay it off within the next 5 years. Do you think that is good idea to agree on the term.
I had a agent trying to make the deal through and want us to close the deal by next week end. Thank you for your time.
I had a agent trying to make the deal through and want us to close the deal by next week end. Thank you for your time.
If you need to make this happen by next week, then do it. However, that rate is high. I would consider refinancing in 6-12 months.
Hi akk19ml,
I agree with Eric that the rate is quite high compared to the rates available in the market right now. Moreover as you are planning to pay off the dues within next 5 years, check out the agreement carefully to see if there is any pre-penalty clause mentioned. Though, I think there won't be any such clause but it's always better to be on the safer side.
Thanks
I agree with Eric that the rate is quite high compared to the rates available in the market right now. Moreover as you are planning to pay off the dues within next 5 years, check out the agreement carefully to see if there is any pre-penalty clause mentioned. Though, I think there won't be any such clause but it's always better to be on the safer side.
Thanks
despite the high rate, your plan to pay the loan in full in 5 years will negate quite a bit of that interest. yes, you can certainly entertain the idea of refinancing next year, but as jameshogg noted, you'll want to ensure there's no penalty being charged by your seller for early repayment. you didn't say how you'll be paying the loan - by that i mean, whether you pay according to a 5-year schedule, or simply pay based on the 15-year schedule and come in at the 5th anniversary with the cash need to pay it in full. that will have an impact on your interest costs - the more you pay now, the greater you'll save on interest now and in the future as well.
if you need to close quickly in order to lock this in, then do it! it sounds like you've made a reasonable deal for yourself.
if you need to close quickly in order to lock this in, then do it! it sounds like you've made a reasonable deal for yourself.
Do you HAVE to close by next week? If not, I think you are shooting yourself in the foot. They are incredible rates right now, ultimately depending on your qualifcations of course. But if you have good credit and income to document then I would contact a broker. With you already putting down a good amount you could get some great programs.
If you do choose to go with the seller route I would def. make sure you don't have a prepay as everyone else stated. Best of luck! And if you have any further questions, please feel free to shoot me an email!
If you do choose to go with the seller route I would def. make sure you don't have a prepay as everyone else stated. Best of luck! And if you have any further questions, please feel free to shoot me an email!
Sorry, the above post is mine. I wasn't signed in.