splitting a mortgage between 2 lenders

[denlocke]

What is the name of your state? WA

We are trying to buy a home from a family member who is willing to privately finance a portion of the home for a yet-to-be-determined low interest rate. The price of the home is 185,000 and he is willling to finance 100,000 privately. But he needs the 85,000 so we need to find a lender to finance that portion. Would a lender be willing to split a mortgage like this? How would we go about doing it?

 

[HomeGuru]

What is the name of your state? WA

We are trying to buy a home from a family member who is willing to privately finance a portion of the home for a yet-to-be-determined low interest rate. The price of the home is 185,000 and he is willling to finance 100,000 privately. But he needs the 85,000 so we need to find a lender to finance that portion. Would a lender be willing to split a mortgage like this? How would we go about doing it?

**A: first, what is the existing underlying mortgage balance, if any? If the balance is more than the $85K, then run the numbers again.
If the exisiting mortgage balance is lower than $85K, then it may work provided the new mortgage is in first position and the Seller is willing to subordinate his mortgage to be in 2nd position.

 

[denlocke]

payoff is 83,000

I believe that 83,000 is the payoff and that is why he needs the cash.

 

[denlocke]

2nd Position?

Do you mean that he would be 2nd position on the Title work? I believe he knows about this.

 

[HomeGuru]

I believe that 83,000 is the payoff and that is why he needs the cash.

**A: ok, then have your lender figure out how much the loan needs to be because it must be a lot higher to cover the closing costs, points, prorations etc. so that the net cash equals $83K +.

 

[denlocke]

how much is alot?

How much is "alot higher"? Another question I have is, what about PMI? I don't effectually have a down payment for the 83,000 (that may be another issue) so I will probably have to pay PMI, right? But I will only have to pay PMI on the 85,000 portion, correct?

 

[HomeGuru]

How much is "alot higher"? Another question I have is, what about PMI? I don't effectually have a down payment for the 83,000 (that may be another issue) so I will probably have to pay PMI, right? But I will only have to pay PMI on the 85,000 portion, correct?

**A: consult with a mortgage broker.