Buying house from private owner, down payment + 60 mos payments????

I'm with everybody else, get a mortgage. They are practically giving you the money right now.

 

GO TO THE BANK! Nothing against the house but with 25K down you can get a loan (if not you should not be buying) at a low interest rate. Get a 15 and pay it off faster if that is your plan.

The problem with the option you have laid out is the house is not yours until 5 years from now. In the meantime he gets sued, gets a divorce or dies then you are in a bad place. Easy to avoid just get a loan and reduce your exposure to disaster.

 

If you walk outside of your house and yell "I NEED A HOME LOAN!"

I bet you a mortgage lender would fall out of the nearest tree with a briefcase, and a hand ready to shake.

 

Oh also avoid the 401K. Unless the laws have changed if you leave your place of work the loan is due in full. So unemployed and up a creek.

 

To many crazy fucked up situations could potentially happen that leaves dude out a large sum of money and no house.

See post #22 for just a few of the possibilities.

If Interest rates were 12%, sure...risk it. A 10 year mortgage is less that 3% APR right now. That's CHEAP insurance in the event something happens to the current owner.

 

yeah that’s what I’m saying. WTF. A city lot costs 70k by me.

 

LOL at all the GET A MORTGAGE people.....rates are so low they are almost free...

Well almost free isnt FREE. If the owner is like...ill take 100K, 25K down and 1K a month for 60 months thats 25,000 + 60,000 = 85,000. Now if the "rest" the OP was talking about is only the last 15,000 then the guy is actually offering FREE money. Why not take it. If you do the math for a 75K loan for 10 years at 3% thats still about $5,800 in interest.

Again, these types of sales used to be pretty common around the midwest. If properly done you have lawyers, contracts, these are recorded with the county.

Its not like after 5 years the guy comes in twisting his handle bar mustache and throws you off the property keeping the land.

We see some of these types of sales around my area now as a crappy way to not fix up foreclosures to sell. You buy a crappy rundown foreclosure. You advertise it for lease/sale. Do a contract and let the 'buyer' fix it up. They make payments but if they miss or just leave you get the place back and do it again. The best part is since you're selling it...you aren't responsible for the upkeep or habitability.

This does not sound like that type of sale.....Go for it. unless the seller prefers all cash then get a loan and be done with it.

Good luck. The place looks nice.

 

some 401k's are open for utilization for the first home purchase without penalty.

 

A home loan qualifies but I suspect it still falls under these rules
http://www.401khelpcenter.com/loans_2.html#.Xwxp5y2z3OQ

I would be VERY careful about this. IMO not worth the risk. Plans can change even if yours allows you to keep the loan. And at a minimum you would have to stay in the plan, reducing your options vs a transfer IRA. Oh and notice the interest is not deductible. Kind of like a land contract, I would avoid these.

 

depends on location. Look at Maine... there are 30+ acre plots with ocean or river access going for $200k ish

 

$77.00 in debt...less than $100.00

 

right. it would need to be for a mortgage.

 

Does that count the bet to the Air Fence fund that didn’t get paid??

 

This is how it works.

 

This is not how it works.

 

You should get a mortgage. The delta between expected returns from investments and the absurdly low interest rate on a mortgage makes it a no-brainer.

Take the difference between what the mortgage payment is and the $1K/month you were planning to pay and put it into index funds.

People don't take into account the opportunity cost of what your money could be earning you when doing "interest math".

 

if you're in Ohio, give me a call. We draft these quite often.

 

Excellent about the 77 debt. My concern is the ballon payment. What interest rate will you be paying the owner? I assume you will have to get a loan for the 25k. Can you swing a 1000 payment while paying off the 25k. I’ve seen good people know that a ballon payment is coming and still they were not prepared for it and had to do things they would never had considered. If you do decide to go forward make sure your attorney writes up the contract and spells out what will happen if he dies etc. Good luck

 

Not to be rude, but you don't know what you are talking about. The house is his the moment he walks away from the closing table. The only thing that can change that is him failing to meet his contractual obligations. If the lienholder dies or becomes insolvent, the payments would simply go to the estate or bankruptcy trustee. If the current owner cannot convey clear title at closing, the title company will either fix the mess or negate the sale.

 

I might be missing something obvious but it seems to me that the seller is taking the bigger risk here.