“You don’t want to have so much money going toward your mortgage every month that you can’t enjoy life or take care of your other financial responsibilities.”

~ Dave Ramsey

A majority of the homebuyers are able to land a mortgage comfortably. However, if the things didn’t go as per expectations for you, you can always choose seller financing to fund the transaction.

Seller financing is an alternate financing option under which, the seller finances the purchase transaction for the new homebuyer. It is quite similar to a regular mortgage where the seller serves the role of your lender. The seller can finance the entire amount or just the amount that the buyer requires to close the deal.

How does a seller financing help an existing homeowner?

Seller financing may sound like a risky deal for the existing homeowner and it is to some extent but it offers incentives to counterbalance these risks.

• Seller financing is a great marketing gimmick in a buyer’s market and it can help you land a client quickly.
• Seller financing is a long-term investment for the existing homeowner and he can keep earnings interest for several years.
• It allows the seller to make the sale at current asking price. In some cases, you might even escape the repairs with seller financing coming into act.

If you are the seller in a seller-financed purchase, make sure to check the credit history of the buyer before offering a loan. The buyer should be able to make timely mortgage payments.

Benefits of seller financing for a homebuyer

Seller financing comes into play only when the buyer requires financial aid.

• Seller financing helps the buyer to choose properties that he cannot afford under his current financial circumstances.
• You can save private mortgage insurance money and might even land a favorable interest rate in the process.

For the buyer, it makes sense to find out the current title of the property and any existing loans on the house. At the same time, make sure to ask for a professional home inspection before purchasing the property.

It is best to hire an attorney that specializes in seller financing. You can get all the paperwork done in the correct format and avoid any legal obligations in the process. For sellers, it makes perfect sense to use the property as collateral to get the additional protection in case of a default.