Seller Financing -
Means you're borrowing money from the seller instead of a bank, making monthly payments to the owner instead. Also "owner-financing" or "purchase-money mortgage".
This is one of the easiest and least costly ways to finance a property.
Means you're borrowing money from the seller instead of a bank, making monthly payments to the owner instead. Also "owner-financing" or "purchase-money mortgage".
This is one of the easiest and least costly ways to finance a property.
For a seller to carry a first mortgage, they must own the property free and clear. When a seller carries a 2nd mortgage they are aiming to get the property sold quickly.
Some sellers have never heard of this type of financing or have never considered it.
Some sellers have never heard of this type of financing or have never considered it.
Although this move is fairly simple, you may need to educate them on the benefits. Next, the buyer and seller agree to interest rate (if any), terms, and conditions. The agreement is then signed by both parties and submitted to a closing attorney.
Seller Financing Pros:
- you could possibly get a no money down deal.
- flexibility of negotiating interest rate, down payment, monthly payment, duration of loan, etc.
- easier loan qualifying terms than a traditional bank.
- avoid fees associated w/ mortgage
- you could possibly get a no money down deal.
- flexibility of negotiating interest rate, down payment, monthly payment, duration of loan, etc.
- easier loan qualifying terms than a traditional bank.
- avoid fees associated w/ mortgage
- once you fix up the property you can obtain a loan for the appreciated value and offer to buyout the seller.
Seller Financing Cons:
- seller may be asking a HIGH price.
- seller may try to avoid inspection or appraisal
- seller may want large down payments and higher monthly payments
- interest rates may be higher than traditional mortgage
- seller may be asking a HIGH price.
- seller may try to avoid inspection or appraisal
- seller may want large down payments and higher monthly payments
- interest rates may be higher than traditional mortgage
Benefits to the Seller:
- they receive a steady stream of cashflow over time
- seller acts as the bank and receives more money back compared to a typical sales transaction
- no large tax bill to pay on the sale & seller only pays taxes on the income earned each year.
- they receive a steady stream of cashflow over time
- seller acts as the bank and receives more money back compared to a typical sales transaction
- no large tax bill to pay on the sale & seller only pays taxes on the income earned each year.
