How do you use seller finance as a second mortgage position as a down payment?

The seller is basically loaning you the money for the down payment, example:





Home sells for $100,000, the bank will give you a 75% LTV (Loan To Value) or a $75,000 loan. So the seller takes a 2nd trust deed of $25,000 from you the buyer and he has essential loaned you the down payment.





Disclose this to the bank or 1st trust deed holder or you could be in big trouble.





As far as the bank is concerned, if you default and they foreclose the seller(the old owner) who holds a 2nd trust deed is out of luck, he loses that money.





Unless he pays the 1st trust deed payments and forecloses on his 2nd trust deed, then he can sell it at a foreclosure sale to get his money but he still has to pay off the 1st trust deed first before he can collect his part at a foreclosure sale.How do you use seller finance as a second mortgage position as a down payment?
Its all paperwork. for the most part, you cant use a second lien position for a down payment. If the seller wants to pay for the closing make sure the bank will allow it. On the 1003 there is a place for subordinate financing.