How to Buy a House From a Seller Who Will Hold a Second Mortgage
- 1). Obtain permission from the first mortgage lender. The first mortgage lender typically mortgages up to 80 percent of the purchase price of the home and verifies where the money comes from as the form of a down payment. This means that if you are financing the down payment or the seller is holding a second mortgage, you need to first obtain permission to do this from your first mortgage lender.
- 2). Execute the sales and purchase agreement with the seller. Write up or have a real estate agent or real estate attorney draw up a purchase and sales agreement, which spells out the financing terms as well as the sales and purchase information such as the purchase price of the home and down payment requirements.
- 3). Negotiate the terms of the second mortgage with the seller. Negotiate with the seller how much of a second mortgage they will agree to hold, the interest rate on the second mortgage, the monthly payment amounts and the term of length of time of the second mortgage.
- 4). Write and sign a promissory note. Work with a real estate attorney or agent to create a promissory note for you to sign. The promissory note includes all of the information on the second mortgage and your signature acknowledges your repayment of the mortgage to the seller of the home.