I created an agreement between myself and another real estate investor. This agreement contains a promissory note and a balloon mortgage. I have not done business in Iowa previously, and I have not drawn up a balloon mortgage previously. I would like some assurance (an opinion) as to whether the balloon mortgage is "fine as is" and can be filed successfully with the Polk County Iowa Recorder.
I already knew that.
It is the particulars I am wondering about. ie/ My "Lender's Fee" and an optional "Loan Extension" being the key parts in question.
Maybe all of your question wasn't posted because I don't see any particulars about your lender's fee and loan extension.
That may be the source of the confusion!!
Ok. When I referred to "the balloon mortgage" I was referring to "my balloon mortgage" and not "a balloon mortgage". The particulars are.... I am charging a $5,000 "Lender's Fee" for funding the purchase of the property....... Can I do that? Can I call it that?
This mortgage is intended for the purchase, rehab, renting out, and cash out refinancing of a property in Des Moines, IA.
The balloon mortgage becomes due in 3 months, but I am giving the borrower up to an extra 3 months time if requested.... Can I do that? and Can I charge for that? (I have written the note to charge an additional $750 per month that payback is extended beyond the first 3 months)
I think all of this is legal to contractually agree to. However, I'll try to get an Iowa attorney familiar with this to assist you.
In Iowa, the legal interest rate is 10% and the usury limit is 12%. Thus, you're fine with your interest.
As I said earlier, I think your terms are ok. The general rule is that people can contract to anything they want to - so long as it is not a criminal act.
However, I cannot find anything in the Iowa statutes that says this is ok or that it is not ok. Because I can't find an answer, I can't tell you anything buy my general assessment of things - which is I think you're ok.
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