Buying Home With Seller Financing With Bad Credit
This BLOG On Buying Home With Seller Financing Was UPDATED On June 19, 2017
Seller financing can be a win win situation for both the seller and the buyer.
- The Great Recession and real estate and credit disaster of 2008 was the worst Recession since the Great Depression.
- Millions of Americans lost their jobs, careers, and businesses.
- The mortgage markets crashed and the sub-prime lending market became obsolete.
- The whole mortgage industry went through a major overhaul.
- The Dodd-Frank was created and implemented.
- Countless of homeowners lost their homes to foreclosure.
- Bankruptcies hit a historical high.
- Home Buyers can buy again after bankruptcy and foreclosure.
- For those who had a foreclosure have a minimum waiting period of 3 years from the date of the sheriff’s sale or the date when their names was transferred out of the deed of the home.
- For those who are waiting out the wait period can purchase a home via seller financing.
Benefits Of Buying Home With Seller Financing
- The advantage for the seller to offer short term seller financing is that the seller probably can get a higher price for their home.
- The seller of the home would act as a lender and will qualify the home buyer buying home with seller financing.
- The seller would probably want a larger down payment due to the risk they are taking.
- Down Payment On Home Purchase is key.
- The larger the down payment, the stronger the home buyer because large down payment shows that the buyer has skin in the game.
- 10% down payment or more of the purchase price is often common.
- Sellers of seller financing normally just charge interest only.
Seller As Lender On Buying Home With Seller Financing
With seller financing, the seller is the lender and takes on the role of the bank.
- The seller might have the house free and clear without a mortgage or might have a mortgage on the house.
- If the house is free and clear, the seller will be the only lien holder.
- Buyers will sign note and other paperwork.
- The promissory note contains the terms of purchase as well as the terms of the seller financing terms and its exit strategy.
- Most seller financing agreements are short term agreements and are balloon loans.
- Real Estate Attorneys should be used by both parties: Buyers and Sellers.
Seller’s Mortgage Company
- If the seller still has a mortgage loan on the home, the seller’s current mortgage company must agree to the transaction.
- Most sellers do not notify their mortgage company and go ahead and draw up the agreement.
- We will be discussing the different types of seller agreements on later blogs.
- It is highly recommended that both parties are represented by real estate attorneys.