Max Allowable Interest Allowed on 2nd Mortgage?

What is the name of your state? Missouri

Hi everyone! I'm considering helping out a neighbor with some consulting that I normally do for a fee. However, my neighbor can't afford to pay me anything now. He offered to pay me with a 2nd mortgage on his house. It sounds good, but instead of holding the note and collecting those small interest payments, I'd rather just sell the note. In order to entice a buyer, I want to charge a decent amount of interest. The usury amount in Missouri is, currently, 7.9% (much too low for what I need). However, Missouri Revised Statute 408.232 states:

408.232. 1. With respect to a second mortgage loan, any person, firm or corporation may charge, contract for, and receive interest in any manner at rates agreed to by the parties computed on unpaid balances of the principal for the time actually outstanding.

Does this mean I can charge something much more reasonable considering my needs and risk (like, say, closer to 20%)?

Please help, if possible. Thanks in advance!

GK

[MortgageGuru]

How about a lower interest rate in line with market rates for 2nd mortgages (closer to 10%) and amortize it over 20 or 30 years. Pull up an amortization table online, put in the amounts and see how much interest you earn over the first few years and add the balance to that.

[Ciarraine]

The loan is for a commercial purpose, not a consumer purpose; ie to pay for consulting services. You can charge what you want, provided you get the appropriate disclosures. See a competent attorney.