How would I go about holding a mortgage for someone who buys my house?

House is free and clear, I am consider selling and have been asked if I would hold the mortgage. I am confident in the character of these people. Who do I see, what do I do? New York State.How would I go about holding a mortgage for someone who buys my house?
Very risky - regardless of your assessment of their ';character.'; Why do you think they're asking you to hold the note instead of getting a normal loan through a bank?How would I go about holding a mortgage for someone who buys my house?
Check out the following link for more info on how to execute a seller mortgage (and help on doing it if you want to proceed):


http://www.virginmoneyus.com/RealEstateL鈥?/a>





I agree with many of the other comments - this can be a risky proposition. My question is what do you hope to gain from receiving installment payments vs. the lump sum? Keep in mind the time value of money - the money you receive later may be worth less than the money you can receive by investing the lump sum now. Plus, depending on how much profit you expect to receive, you can qualify for limited capital gains tax on the sale of your personal residence which is very significant.





Now if you REALLY want to offer a decent mortgage, you can try to do a simultaneous close where you sell your mortgage at closing (at a discount, so you'll want to increase your sale price) to someone else looking to buy a note. You can also do split notes, meaning instead of one $400k note, you have 4 $100k notes which makes it easier to sell a portion of your total mortgage for cash later.





Lots of options, but REALLY consider if you want to put this money at risk.



maybe you should ask then why they dont go through a savings and loan association? do they have bad credit? if they do, I dont think is a good idea that you will lend them your money...


Now the interest rate is very good, why not ask a bank?


Personaly I'll not carry the note myself, you never know what could


happen later on... and you will be the loser.
Have the loan documents drawn up by an attorney. You really should run a credit check but there is no legal obligation to do so. But you need a lawyer to handle the closing. That's how it's done in New York.
You see a real estate lawyer to construct an iron-clad contract for you.
in one sentence, don't do it! way way too many ';what ifs'; in this situation.
You first get an attorney and you get the CPA who does your taxes. Regardless of what you think you know about the character of these people, that doesn't mean you won't get screwed 5 or 10 years down the road. What if they divorce? That could mess up your holding the paper. What if one or both of them die?





There are a LOT of factors that have to go into the wording of a mortgage contract to protect YOU. Don't even think about writing this without a lawyer.





You also need the person who does your taxes because you have to have an amortization schedule. The buyers have to know how much interest they pay each year so they can deduct it from their income tax return, and you have to know how much interest you received from them because it's taxable income to you.





If this home has been your primary home, there are tax implications with both income taxes and capital gains taxes when you sell. If you don't buy another primary residence within the IRS' time limit (it was 3 years the last time I looked), you get hit with some hefty taxes. And if you're holding the mortgage, are you getting enough of a down payment to be able to buy another house or condo?





So there you go. You need real estate, legal/financial, and legal/taxation information and representation before you even think about holding a mortgage.

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