Hello,

I have been renting a home for the past 5 years. The owner has finally decided to sale the home to me. I was approved for a loan from my bank. We had the appraisal done and the house appraised for about 10K less than what the owner is asking. I don't have the additional 10K to put down on the home. I would like to ask the owner to do owner finance for 3-5 years. The owner of the home still owes about 50K on the home. Of course I would have a real estate lawyer handle all of the details but I wanted to know a few things before hand.

Is it legal to do owner finance on the home if it is not paid for?

If it is legal, how do we accomplish this so that I am able to receive the $8K tax credit?

Pro's and con's for myself and the owner?

Thanks for any and all advice.

1. YES

2. To receive the 8k tax credit you have to fill out certain paperwork and mail off after closing to prove to the government you should receive it. The first round of tax credits that had many fraudulent cases so the government is cautious on paying out now.

3. Your bank giving the loan might not allow a seller second of 10k since it would put a strain on your debt ratio and make you have 2 loan payments. The easiest thing to do would be to have the seller reduce the sales price to match the appraisal. It will cost the seller much more to get you out and then rehab it and clean up for a vacant property sale than to reduce the price.Hopefully you had an appraisal contingency in your contract.

no legal advice

Oh the most important part is you didn't even mention the appraisal price or your offer price.

My question is, "Why would you be fishing for ways to pay $10,000 more than something is worth?" If it doesn't appraise, then the liklihood is that what you were going to pay for it was WAY TOO MUCH! Find a house that you can buy for what it is actually worth, not what it is worth plus $10K....