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Interest Rate For Contract For Deed
Hi,
We are selling our house on contract and would like to know what interest rate is customary for a contract. We pay 5.95 on our arm loan and 8.5 on our second mortgage. We, of course would like to make some money, but not gouge the buyer. Thanks in advance, Lora |
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I do many sales on contract for deed, and yes often I just make something up as I go along, I figure on those that I owe money on, how much my payments are, other expected expenses and the such, throw in so much profit for me. And the such
In that I make a contract that merely says they have to pay so many payments of so much for a number of months. Remember in a contract for deed the other party is not gaining real equity in the home, athey don't get the deed until they pay you a certain amount of money. If you want to be the lender and you hold a loan, and transfer the title to them, then you have a loan contract. For example the last home I sold was for 250 a month for 20 years. Which is 60,000 dollars I think. For example I paid about 14,000 for the house and did about 5000 in repairs. My down payment was 5000 dollars. So by the time they pay it off I will have about 46,000 profit. But many times the idea is that on a contract for deed, since most people never keep it all that time, they keep it 2 to 5 years, and have to move, so I take the house back, and they have no equity in it, and then I remodel again and sell it again. That way I keep making even more on that same house. I have sold a few where I actually held a loan, and I do them at 10 to 15 percent interest. Now these people may actually have OK credit but for some reason the local banks turned them down and they did not try a mortgage company. But there is a reason people buy on a contract for deed, it is like buying a car at a buy here/ pay here lot, they do it because no one else would ever loan them the money |
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