All Jared wants in the whole wide world is to finally sell his $800,000 estate in Kansas so he can go live on his yacht and sail around the world. Is that so much to ask? But so far, the only person interested in buying it is his coworker Jensen, and Jensen can only get approved for a $600,000 mortgage loan. Jared isn’t about to drop the price on the house that much, and there’s no way Jensen is going to somehow manage to cough up an extra two hundred grand. So...what are they to do?
Never fear, because the vendor take-back mortgage is here to save the day. A “vendor take-back mortgage,” also commonly called a “seller take-back mortgage,” is a mortgage loan offered by the seller…to the buyer. It’s usually not for the full amount, but is only for the gap between the bank-approved financing amount and the sale price of the property. It works just like a regular mortgage loan, but the lender is the seller instead of a bank, and the borrowing requirements (like a person’s debt-to-income ratio) tend to be a little more relaxed. So, in this case, Jensen would go ahead and take out that $600,000 mortgage loan from the bank, and then he’d take out an additional $200,000 loan from Jared. As long as Jensen doesn’t end up defaulting on either loan, this scenario is a win-win: Jensen gets the house he wants, and Jared can finally sell his property and pursue his sailing dreams.
Related or Semi-related Video
Finance: What is a Mortgage?345 Views
Finance allah shmoop shmoop What is a mortgage Well people
a mortgage is just dead it's alone but one with
special tax treatment For most people simply put Any interest
you pay on a mortgage to buy a home is
tax deductible Morty morton's inputs down a hundred thousand bucks
to buy a home that costs four hundred big ones
his mortgages three hundred grand at five percent interest per
year So that's fifteen thousand dollars a year he pays
to rent the money from the bank which he uses
to buy his dream home with the loop de loop
waterslide Morty earns one hundred grand a year and pays
tax on his last fifteen thousand of earnings soas faras
The irs is concerned since morty can deduct his fifteen
thousand dollars in interest against his earnings he does not
in fact earn taxable wages of one hundred grand annually
Instead he earns taxable wages of eighty five thousand dollars
a year Essentially with government is doing is sharing in
some of the cost of renting the money Taub i'm
ortiz home well why would the u s government be
so charitable Well because home ownership has been integral part
of the american dream since the u s of a
i po'ed in seventeen seventy six easy access to mortgages
and then home buying can be a hugely beneficial asset
In the vast majority of cases homes create family stability
a store of wealth and tax dollars for local schools
in the form of real estate taxes So don't feel
bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello
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