With private money lending how is it amortized I.E.$200,000 @7.50% What is best for the borrower ?

Maybe this is a silly question . How is private money lending amortized ? Any examples are greatly appreciated.
Thanks,
Pete
In Buying Property - Asked by Peter T. - Jul 25, 2011
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Answer(s)

Julie Bonny L.
Broker/Agent
Anniston, AL

I use a regular30 yr ammortization schedule and attach it to the contract. A lot depends on how you wrote the contract, ex: what is the ending date you put on contract? I've done one with the seller financing for 10 years, so I printed a 30 year ammortization using the purchase price and interest agreed upon in contract then put a balloon payment at the end of the 10 years at what ever price the schedule has as prinicpal payoff at 120 months.
example: $200,000 @ 7,5% interest = monthly payment of 1398.43 and at 120 months the balloon principal owed is $173589.84. Or you could use the 200,000 @ 7.5% and make the life of the loan for how many years you agreed upon, which if you stated to be paid in full at 10 years,then the monthly payment would be $2374.03 and at 120 months note is paid in full.
Hope this helps

Jul 25, 2011
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Todd A.
Broker/Agent
Mount Shasta, CA

Pete,
The amortization of the loan is the same as if the borrower were obtaining a conventional loan. The interest is paid to the lender, while a small portion of the principal is applied to the balance of the loan. Unfortunately, there are not too many private lenders offering amortized loans..
ps google "amortization schedule" and you can determine how the loan payments will be applied
Good luck,
Todd Anthis
Americor, Inc

Jul 26, 2011
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Cathy P.
Broker/Agent
Brownsville, TX

I have used a 25 year amortization schedule with a 5 year balloon, as well as a 15 year amortization with a 3 year balloon and attached them to the contract. It seems best to mirror conventional banking scenarios, i.e. what terms the banks might offer: 10 year, 15, 20,25,30 or 35,
depending on the property type and other factors.
The value in balloons is that it allows the principals to renegotiate the rate and/or terms at the balloon due date in order to accommodate current market conditions, or simply get paid in full at the time.
The notes seem to be more marketable with the balloons structure, in case the note holder is considering selling the note.

Aug 4, 2011
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

This depends on how the contract is written. Many lenders like ourselves will do 3 or 5 year notes with 15 year amortization schedules. Once you determine the number of payments, you can plug it into an online calculator or use excel to determine your monthly P&I charges

Aug 24, 2011
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