When you read a real estate listing and it says that the seller will consider a 10% carry back what is that?
Answer:
For example, if the property is selling for $100,000, the seller will "loan" you $10,000 towards the purchase of the property. This is used when the property is difficult to finance with conventional financing. Older mobile homes can be tricky to finance for instance. In the $100K example, you could put 20% cash down, finance $70,000, and make payments to the seller for the 10% carry back. This way, your traditional loan is only 70% loan to value (the amount financed versus the market value) which sits better with lenders. This also helps people who have less than perfect credit, because lenders want to have some cushion should the borrower default. If they've loaned you 70% of the fair market value, and you default, when they repossess the property, they can dump the property quickly and still recover the amount you owe.
It means they will carry 10% of the purchase price and then you pay the mortgage company and also you would owe them the 10%, and make payments on that and your mortgage.
Example: you purchase a house for $100,000.00
They will carry 10% or $10,000.00 of that, meaning you only need to borrow $90,000 from the bank - less your down payment of course. You would be paying on the bank loan of $90,000 and the 2nd mortgage of $10,000 to the owner.
It's nice if you are short on a down payment.
This means that the seller is willing to carry 10% of the selling price on a separate contract similar to a second mortgage. Great help for first time home buyer however be aware of the terms and make sure it is not recorded until the first mortgage has closed.
That mean seller will carry back 10% of the house to their mother ship and you will have 10% less home.
Basically the seller is saying that they are willing to help finance the purchase of their home. A second mortgage if you will. You'll sign a promissory note and mortgage that are made payable to the seller. You would make regular monthly payments to the seller with interest(although usually lower than what most lender can offer) until the loan is paid in full.
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