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Seller financing? Experiences?


chapalitajones

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I am sure more will answer but in the meantime do a search as we have discussed this and the comments may help. Some of the buyers commented that it worked well for them and the seller and sold a property that may have not sold otherwise.

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You still need to qualify the buyer or else will have problems, more later.

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We purchased our home in 2005 because we met a Realtor who told us about this home in Las Salvias that

was offering owner financing.

We were here visiting for the first time and it was our 3rd day here and why not- let's look at the house.

We fell in love with the house and put in an offer before we left a few days later.

6 weeks later we came down again for the closing.

We leased out the house for one year and moved down the following year.

We just paid off the baloon payment this past May and still love the house and don't regret our hasty decision-

of course our kids thought we were crazy but they have come around and enjoy getting out of the 100 plus

degree days in Texas to visit during the summer!

So if you are thinking about offering owner financing-go ahead and see what happens-

you just might sell your house to someone like us who had no intention of buying a house!

maw

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Start at the end, think of the worst, how will they pay you off in the end unless they have a home to sell and plenty of equity assuming a declining market, also can they make the payments? Make them put 50% down and demonstrate good payment history and the ability to make the payments, carrying 2 homes might be easy for a few months but in a bad market they may have to choose and here it can be expensive to foreclose. You need to weigh your desire to sell with your risk tolerance and perhaps there might be some give and take with risk factors in order to sell.

There are quite a few foreigners defaulting on their mortgage obligations here in Chapala, many are realtors, developers and speculators so be aware of the high risk groups.

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With the right purchaser this can be a win/win. I know five buyers at lakeside and San Miguel who have mortgages held by seller. In some cases the interest rate is as high as 7% and as low as 0%. Most are a balloon meaning the purchaser needs to come up with their own financing in a specified number of years. Of course one qualifies the purchaser and has a proper and legal agreement. But in a market with a 3 year supply of homes listed it is an option worth considering.

In another case, the contract is payment of 15,000 p a month, zero interest, 300,000 p refundable deposit (refunded if failure to get a mortgage) and a balloon in 4 years with the buyer needing to find a mortgage at the end of the contract. The payments all come off the principal. The house remains in the seller's name and failure to get a mortgage in the 4 years means the payments count as rent. This gives the seller a lot of protection and allows many who are anxious to leave to get on with their lives. Many sellers are seniors and moving on with lives is crucial. It is critical to think outside the box vs being in a house you really want to sell.

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Best to make sure the buyer would qualify for a mortgage at the start. Foreclosure isn't hard with a well drawn up agreement BUT either the seller / noteholder will have to front costs or give the attorney a larger cut and even then say you take the property back, you have to sell it and have holding costs. With 50% down it isn't a big deal. The ideal buyer to finance is one who could qualify for financing with a bank or private investor as it could come to that at balloon time.

Also sellers should be able to live without cashflow in the event of a foreclosure which can take 1 to 3 years in the Mexican courts.

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When we bought our house in 2005, the seller took a 3 yr note for part of the selling price. He gave me a pagota (?) like receipt each month when I made the payment. Upon full payment, I took all those receipts to the lawyer and had the deed redone to reflect the full payment on the note.

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Bottom line is make sure you have done due diligence and then proceed if it means selling your house vs not selling it. Otherwise some will be dead before the house sells or the price will keep dropping and you loose more in this market.

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  • 2 weeks later...

You are all talking about qualifying for mortgages, but I thought there were no mortgages in Mexico. Can you get a loan there for a home? If not where would you get the mortgage from? We are moving down soon to the Lake Chapala area and would really like to know more about this .

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What this thread is about is the seller holding the mortgage. But to answer your question, mortgages are available but typically the rate is approx 11% with a larger downpayment than NOB. Intercasa is in that business as are banks such as Bancomer, etc. If you google "mexican mortgages" you will find other options. Closing costs are higher than NOB as well.

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There are mortgages here but down payments are higher, qualifying is tougher and closing costs are more.

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Why I am getting the feeling that the housing market at Lakeside is reaching a tipping point..people getting desperate wanting to sell and willing to risk the perilous of taking back a note, in order to make a "sale"

I think you're getting that feeling because it's getting closer. The number of houses for sale continues to rise as people move north and/or die while the number of people coming down to buy slows. Supply is building while demand is dwindling.

When sales here were booming house costs were a bargain compared to sun belt retirement housing in the US. Right now if you can buy a house with cash a 3 bedroom 2 bath 1600 square foot house on a third of an acre in AZ, south FL etc would cost less than 100k, Half of the price here. Vacant lots that size are listing for more than that. Prices will have to be a bargain here again before things will boom.... and I doubt prices are going to rise in those markets in the US anytime soon. Prices here will have to come way down.

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