Second mortgage for seller-financed home?
I love reading the advice here.
My wife and I are planning to buy a home in Indiana from our parents, which they own without a mortgage. We’re planning to let the parents finance the sale to us (at a reasonable, IRS-approved, rate).
The current value is about $ 350K. The home is about 20 years old. It is habitable, but needs repairs (roof, carpet, new mechanicals, cosmetic fixes, etc.) which should rapidly increase its value by 10-20%. We plan to buy the house as-is. We have the $ 30K for repairs.
Immediately after that (or during, if possible), we’d like to remodel the kitchen and baths. We will likely want to take a loan (5-20% of the home value) to do it. The parents won’t have the funds for that, so we’ll be looking for a mortgage.
What’s the best course for that second loan?
We don’t want to pay PMI or other unwarranted fees. We have decent credit, 690-710, a low DTI ratio, and good financial reserves.
Any other general advice is appreciated. Thanks!
I seen some answers that suggest a HELOC. I hadn’t thought of that, since I presume the rates will be significantly higher. Wouldn’t a 2nd mortgage make more sense?