Are you considering selling your home but don’t want to wait for a buyer to secure financing? Seller financing may be an option for you. Learn about the benefits and potential risks of seller financing, so that you can make an informed decision on whether this is the right move for you.
Understand the Basics of Seller Financing.
Seller financing refers to a financial arrangement where the seller of a home provides part, or all, of the financing to the buyer. Here’s the typical way we do it. We make monthly payments until we refinance or the term ends. We typically do a minimum of 48 months for a term. You have a recorded deed of trust (or mortgage) on the property to protect your interest. We can even pay a premium and make monthly principle only payments so you’re not reporting any interest income and you get top price.
Weigh the Benefits and Risks of Seller Financing.
Seller financing can be a great financial tool for buyers and sellers alike. But it’s important to weigh the potential benefits and risks of such an arrangement before entering into one. For example, sellers are often able to earn more with seller financing than they otherwise would if they simply sold their home outright. However, there is also risk involved in being a party to a loan agreement. Potential risks include the buyer’s inability to make mortgage payments or the buyer defaulting on their loan. Therefore, it’s important for both parties to do their due diligence before committing.
Understand Your Legal Obligations as a Home Seller.
Before you enter into a seller financing agreement, it’s essential to understand your legal obligations as a homeowner. Research and familiarize yourself with the applicable state laws, regulations, and required disclosures that you must make in such an agreement. Be sure to include any contingencies or clauses that will help protect your interests as the seller, and make sure you adhere to all established guidelines when engaging in seller financing.
Understand Federal and State Laws for Real Estate Transactions.
As a real estate seller, you are obligated to follow all applicable federal and state laws regarding real estate transactions. Understand the necessary disclosures required by law, such as disclosing any existing liens on the property, since failing to do so could leave the buyer open to legal repercussions down the line. Keep in mind that the specifics of each law may vary by state.
When we buy a property with seller financing, we always use attorneys to make sure side are protected.
