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Buyer/seller could seek short-term financing

July 20, 2018
By ERIC FEICHTHALER - Real Estate Law , Cape Coral Daily Breeze

Dear Mr. Feichthaler:

We are excited to move to Florida, and have picked out a great house in Northwest Cape Coral. We have our house in Georgia for sale, and expect it will sell for more than the amount needed to pay for the Florida home in the next 6 months. However, the seller here in Florida needs to close in 30 days, so we need to finance. Our lender has suggested a 30-year fixed rate mortgage. We received the Closing Disclosure, and the total costs and fees will be over $10,000. What can we do to help reduce the cost of this loan?

- Graham L.

Dear Graham:

Congratulations on your decision to move to Cape Coral! Many of my clients have an issue with the timing of the sale of their current home as they move to the new one. In this case, I would have first recommended you make the purchase contingent upon the sale of your Georgia home. However, you indicate that they must sell before your Georgia home will be sold, so you need to finance. The first thing I would do is ask the seller if they can provide you short-term financing to accommodate the sale. I frequently prepare mortgage documents for seller financing, and the cost of doing so is a fraction of what it costs for conventional financing. The key will be whether the current owner has enough equity to loan the funds to you. That is, if the current owner has a large mortgage to pay off at closing, they won't be able to finance your purchase. See if they are interested in offering you seller financing, it may be in their financial interests to do so as well.

If the current owner cannot offer seller financing, you will want to obtain the best terms for your loan. All you need is a "bridge loan" a short-term loan to carry you until you sell your Georgia home. Therefore, a short-term loan, or a loan with an adjustable rate after a year, should have a significantly lower interest rate than the 30-year that was offered to you. Also, you will want to be very careful that the loan product does not carry a prepayment penalty. Since you are fairly certain you will be paying this off as soon as you sell your Georgia home, you don't want to commit yourself to any further expense than necessary. Make it clear to your loan officer what is sought a short-term, low interest, no prepayment penalty loan.

Finally, if the costs and rates by the lender don't seem good to you (or even if they do), seek a second lender to provide an offer on a loan. Lending is a very competitive marketplace, which can lead you to save thousands of dollars if you choose the right one.

Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continued his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest from 2011-2015, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.



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