Financing -- Loans/Owner financed mortgage?
My wife and I sold a home to a couple over three years ago for $100,000 and agreed to finance $90,000 for 10 years at 6.5% interest.
The couple has paid early, or on time, every month since.
I just noticed that the total interest they've paid is now about half of the total interest for the 10 year note.
If we were to be doing this today, at today's rates, I'd have probably only asked for 3% interest. So, I would like to reward them for their good payment record and forgive the rest of the interest on the loan.
When we did this I paid for a Title Company to do the loan and have it legally filed. The buyer and I have amortization schedules from that closing that we're both using for IRS purposes in determining interest each year.
My question is;
Will I negate the legality of the loan agreement by telling the buyers that they only need to pay the amount in the 'principal payment' column for the remainder of the loan?
I really don't want to do anything that wastes the $2500 we spent to have this legal and filed to protect us if something unforseen were to happen to the buyers.
Thanks in advance!
My advise would be to do nothing, or this might void the original contract. One thing you could do is to apply the overage to the principle balance,thereby they would pay the home off sooner than the 10 years you agreed to.
Hope that helps you make your decision easier.... :)
Thanks, and good luck!
Sr. Loan Officer