Is Seller Financing the Right Choice when Buying a Home?

Seller Financing has been around as long as there’s been homes to buy!

But is Seller Financing right for your situation?

If 2014 is the year you plan on buying or selling your home, exploring the option of Seller Financing may be something you’ll want to consider. Of course there are always pro’s and con’s to any real estate transaction that includes seller financing, so let’s look at what it takes to buy or sell a house using seller financing.

Buying a home with Seller Financing

The first thing we need to talk about is the why’s of all this. In many cases, buyers opt for this option due to issues with their credit or other circumstances that make a conventional loan unobtainable. Other issues homebuyers face are high debt to income ratio and even though your credit is good, you’re still unable to secure a loan. This is where seller financing may make good sense for all parties.

Next let’s look at the how’s of seller financing. When purchasing a home with seller financing, your very best course of action is to ALWAYS involve a seasoned real estate broker who is well versed in the additional paperwork required. It may also be a prudent measure to speak to an Attorney who can help you and your agent understand the recent changes instituted with the Frank-Dodd Act and any other necessary documents you might need.

Any seller financing the sale can not be considered a “loan originator” as well as meeting some other requirements such as:

  • They must be a natural person, estate, or trust (and not a loan originator)
  • They haven’t financed another property within the past 12 months
  • The repayment schedule must not result in a negative amortization
  • Financing must have a fixed rate or an adjustable rate of interest

Selling your home with Seller Financing

As outlined above, the seller has some stringent guidelines they must meet in order to finance their home. Other issues that any seller must consider are:

  • Do they have enough equity in their home to even offer this option?
  • Do they have a type of loan that may require the first position lien holders approval?
  • Is the property essentially in a condition where financing is not an option? Fixer, raw land or an unfinished remodel just to name a few

Check out my handy calculator for more info→

Affordability Calculator

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Today’s homeowners have all kinds of obstacles they need to overcome before they are in a position to offer seller financing. If you’re in a position where Seller Financing is your best option as either a buyer or seller, make sure you contact me to get the very best representation and resources to give you every opportunity to exercise Seller Financing.

 


Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate