Selling a Home on Contract

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Joined: Thu Feb 19, 2009 7:04 pm

Selling a Home on Contract

Postby PawPrint53 » Sun Feb 17, 2013 3:23 pm

I'm curious if anyone has ever done this and if it worked out or not. I have a mortgage on my house, and I plan to keep paying the mortgage and taxes, having the buyer pay me, and putting in a balloon payment in five years. He'd name me as an additional insured on his homeowner's policy. In the interest of full disclosure, the buyer is my son, who is working on upgrading his credit score (it's gone up 100 pts. in the last year). He's also self-employed--the combination of a not-so-great credit score and self-employment probably preclude him from purchasing a home the usual way right now. He is currently renting my other home, which we plan to move into, and he wants to buy the home we're living in now. I would, of course, hire a real estate attorney.

Thank you for any thoughts on this matter.

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Re: Selling a Home on Contract

Postby Justus » Sun Feb 17, 2013 4:45 pm

Your mortgage might have a due on sale acceleration clause, which would prevent you from legally selling it without being on the hook to pay the whole thing off.

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Location: Cincinnati, OH

Re: Selling a Home on Contract

Postby TCstr8 » Sun Feb 17, 2013 6:27 pm

Generally, transfer of ownership interest to another person or entity COULD trigger the Due on Sale clause. However, in the current real estate climate the lender is not going to call the loan due if the payments are being made.

One thing you may want to discuss with the real estate attorney is a land contract. One benefit (for your son) if you do a land contract, down the road he can refinance the home into his name, instead of having to treat it as a purchase transaction.

Just something to think about.
T.C. Strait
Ohio Loan Officer / Manager @ Mortgage Broker
NMLS ID 164070

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