When the home you want does not have a mortgage or has one the seller is willing to carry, seller financing can be a great deal for a person buying a home.
Usually, the seller will want 10 percent down, but not always. The interest rate charged could be a point above the lowest bank rate. But one big advantage: The seller usually doesn’t require mortgage insurance, meaning the monthly payment will be lower in any case.
The loan can be constructed on a 30-year basis. Most seller-finance deals, however, last for five to seven years, then are settled with a balloon payment for the balance.
Sometimes, a buyer who opts for seller financing will be in a better position five or seven years down the road and will then be able to qualify for a 30-year conventional mortgage.
When buying a seller-financed property, be sure to get a current appraisal. Get title insurance for a few hundred dollars. It will show any tax liens and any other claims that could affect a property transfer.
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