Don\’t Miss Out On The Opportunity Of Seller Financing
If you were to take the time to research the facts about homes sales, you would discover 10% of sales involve some aspect of seller financing. The major benefit to a homebuyer is the ability to negotiate flexible terms. Unfortunately not all sellers are open to this type of arrangement so you\’ll need to interview many sellers before finding the right one. The best sellers are ones facing a large capital gains tax, have trouble locating the right buyer, open to receiving payments over time with interest, or amenable to increasing the sales price to assist with financing.
In real estate terminology, seller carry-back happens when the seller is open to selling you their home in monthly installments. Once your sale is complete, the seller will transfer title over to you in return for a promissory note obligating you to a home loan paid via monthly installments. The promissory note will set up a lien on the home favoring the seller until you cure the loan. Seller financed transactions can include a balloon payment due within a few years. After this occurs, you\’ll probably prefer to take out a new loan or move. The perfect seller to find is one who owns the property free and clear since they aren\’t obligated to pay off a home loan after the sale.
In situations when you don\’t have enough funds to match the sales price, you can arrange for seller financing to make up the difference. This option also helps you save money because the interest rate will be less than regular secondary financing.
If you want to utilize this option, you\’ll need to assemble detailed information about your income, credit, work history, and references prior to approaching a seller. Unlike traditional financing, you\’ll get more flexibility with a seller. Some possible options you may discuss may include:
1) Better interest rate
2) Low starting payments
3) Buying down the loan rate
4) No prepayment penalty
5) Postponing the balloon payment for five years or the right to extend the home loan if circumstances make it difficult to qualify for refinancing or if you\’re unable to pay the balloon payment in its entirety.
6) The ability to let a qualified buyer assume the promissory note if circumstances force you to relocate.
While it may be ideal to negotiate all these terms into the deal, the seller may not be willing to agree to all these terms. Consider which terms are most important to you and be flexible design to sacrifice those terms that aren\’t as important.
Looking to find the best deal on Brentwood homes for sale? Come and see what a Brentwood Realtor can do to help you find your dream home.
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