Owner selling home - questions!

[IOBA]

I have someone who has shown an interest in purchasing my home.  He's already done a drive by and asked for an appt to see the inside.

He says no collections, no baddies, and VA financing.

So...if after seeing the inside, he still agrees to the price (he's already researched the area and the price and still wants to move forward).

I am looking for thoughts, suggestions, feedback on two scenarios...

1.  Owner financing.  

* I don't know if he can really get a VA loan at this time.  If he can't, then owner financing is an option, with a higher purchase price, no interest.  

* What suggestions do you have for terms of the owner financing?

* Any suggestions/links for a contract?  (Since links should not be posted, please send them to me privately in email on this site.)

* What would be a good time to hold the contract for?  Two years?  Three years?

2.  VA loan.

* No realtors will be involved in the sale.

* Title company has already provided estimated closing costs based on two purchase prices.

* Any suggestions/links for a contract? (Since links should not be posted, please send them to me privately in email on this site.)

* Any suggestions for pushing through a VA loan to get it to close in less than 30 days?

Thanks for the soon to arrive responses!

[webhopper]

I think that you should use a lawyer to draw up the contract, or you could even use a site like rocketlawyer or legalzoom to help you out cheaply.

Sometimes the sales contract can be state specific. I'm in Oklahoma, and I know that it is state specific.

What state are you in?

[IOBA]

I am in Virgnia.

I am not sure what the VA lender requires for a contract, but I can't see where it would need to be 50 pages long.  Just something, one page, short and sweet, with the legal description of the property, the purchase price, the terms of financing (VA loan or owner financing), and a closing date.

[StartingOver10]

Having a one page contract sounds nice, but I would be very careful anyway and hire an attorney. Seller financing is a great thing. But you have to protect yourself and if you don't charge interest, what happens if the buyer fails to pay either a payment or the lump sum they are supposed to pay? Then you have to go through the entire f/c process so the paperwork has to be set up correctly to get this done.

This is the part where it would behoove you to have an attorney prepare the contract AND prepare the note and mortgage. It is really in your best interest. The attorney can give you the pro's and con's of holding the note for the buyer. BTW, I'm in favor of it, but it needs to be beneficial for both parties and you have to take into consideration the "what if's" that can occur (that's what a note and mortgage does).

As a general note, the contracts that have no issues can be short and sweet. The one's with issues need to be long. The problem is, we never know which is which until we get into the deal! Be safe, don't download a "standard" contract. Have an attorney do it.

[203bravo]

I totally agree have a lawyer do the contract to protect you and the buyer if you go this route.  In Jan. I did an owner finance deal on an invest property and everything went well... I had him put 10% down - interest 7% (ps legally if you loan money you have to charge some interest) - and a balloon payment due in 18 months for the remainder of principal.. In all the contract was around 7 pages.

Only take on this risk if you are certain that the buyer will make good AND you can afford to take the risk.

eta: you defintely want to make sure that a deed of trust in your name gets filed on the property.

Best of luck.

[webhopper]

The state specific form will have all of the state specific disclosures listed on it for you to check. If you aren't careful with following your state specific requirements then the would be owners can sue you later on if something isn't right.

Uslegalforms is another resource that I've used in my business. In most cases the form will cost less than $50

I got a free state specific quitclaim deed from rocket lawyer once

[IOBA]

Thank you for all of the replies.

While I was inpatiently waiting for replies, I made a phone call to a local lender that does VA loans.  The lender would not tell me the minium credit score, DTI ratio, or the "necessities" of the ratified contract.  The lender said they actually review each case individually and make a human decision.

So, got the best and the worst case scenario for interest and monthly payments.  Asked about inspections (not required), condo certs (not required, although if there is an HOA fee, they want to know about it to include it in DTI), appraisal, closing costs, app fees, and "special assistance" to a homebuyer.  All in all, some great information!

Had the title company give me estimated closing costs.  So I feel like I have a pretty good idea of what the financing would look like for this person.

If we go owner financing, I would get an attny to draw up the paperwork.  I don't think title/deed would change names until there is bank financing/balloon payment, right?

  Been a busy day!  Fingers crossed the person wants to buy and do a ratified purchase agreement this week AND can get bank financing immediately!

[webhopper]

Good luck!

[203bravo]

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@IOBA wrote:

If we go owner financing, I would get an attny to draw up the paperwork.  I don't think title/deed would change names until there is bank financing/balloon payment, right?

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No - You would basically act as the bank and the deed would go into the buyers name and you would get a deed of trust,, this way if the buyer attempted to sell the property, you would come back as a lien holder and 1st in line during the title search.

[IOBA]

Ugh.  So I would need to do a foreclosure in the event of non payment.  Oh boy!  

How much should I ask for a down payment if owner financed?

What should the interest rate be?