Is this worthwhile financialy? Is it a safe investment? We own the home. Our primary residense.
I am going to assume that by this question you mean to hold a note and mortgage and not sell the property pursuant to a Contract for Warranty Deed - which is another way of selling your property and continuing to be paid on it. If you hold the mortgage on the property, you will need to trust that the person(s) that you are lending to will be able to pay the mortgage over the life of the loan - whatever period that is. If they do not, you will need to foreclose, which can take up to a year to complete - a year in which you are not receiving payments, for which you may be responsible for insurance and real estate taxes. If you do decide this is a risk you are willing to take, make sure you have the Note and Mortgage documented by an attorney who knows how to document these kinds of loans and is not just doing you a favor. If they are not documented properly, the mortgage can be thrown out and you only have the right to sue on the Note.
This is a bad idea, unless you have no other choice. If the buyer can not get traditional financing he is not a good credit risk, so why would you want to take on such a risk?
In this financial environment, you want to minimize risk. Get your money from the house, and then invest it wisely and conservatively.
Hope this helps.
Mr. Fromm is licensed to practice law in PA with offices in Philadelphia. He can be reached at 215-735-2336. He is featured as a 5Star Wealth Manager in the current issue of Philadelphia Magazine, November 2009 on page 123.
The response herein is not legal advice and does not create an attorney/ client relationship. The response is only in the form of legal education and is intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received.
By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question.
Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.