mortgage loan

[inquirer]

can this happen?

can an individual in the state of colorado lend money to another individual money to purchase and fix up an old house?

the term will be 12 months or less.

the lender will charge 10% of the loan amount as fee and 12% interest only accumulated until payoff.

after home is fixed up it will be sold and prior lender will be paid off including fee and accumulated interest.

does the individual have to have a license to do this?

is there a usury law?

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by inquirer:
can this happen?

can an individual in the state of colorado lend money to another individual money to purchase and fix up an old house?

the term will be 12 months or less.

the lender will charge 10% of the loan amount as fee and 12% interest only accumulated until payoff.

after home is fixed up it will be sold and prior lender will be paid off including fee and accumulated interest.

does the individual have to have a license to do this?

is there a usury law?<HR></BLOCKQUOTE>

Yes, this can be done and no special license is needed as it is considered a private deal involving real estate. There is a usury law but the 12% interest rate falls under that rate of usury. Be sure to get everthing in writing such as 1. use and purpose of funds, what percentage will be used for property purchase vs. repairs 2. on the repairs issue- is the money going to be used for material costs only or will the indivdual be paid for labor 3. 12 month time limit and 4. specify if the interest is simple or compounded. 4. Also specify the extension period in the event the home does not sell. If the home does not sell will the lender still get paid off? Will the home be rented? If so, how is the rent going to be split. Is the individual putting labor in as his equity in lieu of cash etc? What is the profit division perentage when the property is sold? How will other expenses be paid for and divided ie. electric, water, insurance, real property taxes,mortgage payments, if any etc. that will be used during the course of repair. Will the individual live on the property during the repair period? If so, who will be responsible for paying the telephone bill? Is there any provision that applies if the parties disagree on something? Who has the most say in matters; the one who puts up the cash, the one who does the actual repair work or do the parties have an equal say? How will the money be funded ie. weekly, monthly, in advance upon estimates, in arrears upon presentation of invoices etc. What hapens if the repairs are not completed on time? Will the lender be on title?

 

[inquirer]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HomeGuru:
Yes, this can be done and no special license is needed as it is considered a private deal involving real estate. There is a usury law but the 12% interest rate falls under that rate of usury. Be sure to get everthing in writing such as 1. use and purpose of funds, what percentage will be used for property purchase vs. repairs 2. on the repairs issue- is the money going to be used for material costs only or will the indivdual be paid for labor 3. 12 month time limit and 4. specify if the interest is simple or compounded. 4. Also specify the extension period in the event the home does not sell. If the home does not sell will the lender still get paid off? Will the home be rented? If so, how is the rent going to be split. Is the individual putting labor in as his equity in lieu of cash etc? What is the profit division perentage when the property is sold? How will other expenses be paid for and divided ie. electric, water, insurance, real property taxes,mortgage payments, if any etc. that will be used during the course of repair. Will the individual live on the property during the repair period? If so, who will be responsible for paying the telephone bill? Is there any provision that applies if the parties disagree on something? Who has the most say in matters; the one who puts up the cash, the one who does the actual repair work or do the parties have an equal say? How will the money be funded ie. weekly, monthly, in advance upon estimates, in arrears upon presentation of invoices etc. What hapens if the repairs are not completed on time? Will the lender be on title?<HR></BLOCKQUOTE>

The one lending the money is not "seller financing", he is merely a lender to a borrower who is purchasing anothers property.
Seems as though he is like a mortgage company; what if he advertises to loan money?