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July 29, 2009
What does this mean...
"Seller is offering financing for 5 year term with 30 year amortization @ 5.25%"
Is this like an ARM? What happens after 5 years?
Comments
You'll have to get details. Sounds like it's due in 5 (balloon payment.)
Posted by: cmu at July 29, 2009 5:31 PM
Agree with cmu. This is common in owner financing, they don't want to hold the note forever, and expect that in 5 years time you will be able to refinance with a regular bank since you have equity in the property (and better credit, if you currently have bad credit scores). Typically whenever you refi they get the balloon payment from the other bank.
Posted by: setancre at July 29, 2009 5:57 PM
For five years you pay monthly interest and principal as if it were a fixed rate 30 year mortgage. As others state, you'll need to refi with a bank.
Posted by: antidope at July 30, 2009 9:45 AM
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