QUOTE (CarrieKoch @ Nov 17 2010, 08:31 PM) $320 value, $40k moving money. Mortgage $350k. Payments $1700/month.
Would do a rent to own per RLG. Payments for this would be around $2400-2720.
So, definitely not a great deal when she needs the 40k. Perhaps I should get her to put a 2nd on the property or a secure HELOC to get her next home.
Is this a type-o Carrie?
A mortgage of $350k plus $40 down (totaling $390k) does not make a good deal on a $320k property. At least not in my book.
So, presuming you meant a mortgage of $250, you`re looking at a spread of $30k. That`s decent on a $320k property.
But the $40k down would stop me in my tracks. To put that much down, I would be looking for a better deal. And $40 is a LOT of moving money... is she moving to Europe with a family of 12? Tell her you`ll hire the moving van, and pay her legal costs, and put enough for a security deposit in her hands. Anything more than that is not "moving money" - it`s money she wants to pay off her visa with.
... and that`s fine - there`s nothing wrong with her wanting to get that money in her hands (i would too!), but it definitely makes it tougher for you to buy.
But - in answer to your original question, I would not make it a deposit, but an amount that she gets at `closing` of the deal. Note, as per Thomas, this is not the true closing of the deal, since that`s a future date as defined in the AFS, but rather I mean the date that *beneficial ownership* (as opposed to legal ownership) transfers to you when you get the keys. This would be recorded on the offer as something like `additional funds`.
Thanks,
David.