There are various ways in which you can offer seller financing. But there is an important fact that you have to keep in mind if you decide to provide fractional or full financing until the buyer pays off the loan to you; you will not receive some or the entire proceeds from the sale of your home. So think long and carefully about it, if you really want to provide this option to your buyer.
If you decide to go through with and offer the buyer financing, here are some key points that will help you and the buyer come to agreement is a easy manner.
If you have a current mortgage on your home: Here are the steps that you should take if you still have a mortgage payment on your home:
1. You and the buyer of the home negotiate and come to an agreement about the purchase price.
2. Make sure that you and the buyer are aware of what the balance of the current loan is.
3. Consider and then decide on how much you are willing to finance for the home buyer. Do you want to finance the whole loan and require a down payment? Or are you just willing to finance a small part in order to complete the gap between the buyer’s down payment and their loan amount; which could possibly be five or ten percent?
4. To ensure that everything flows smoothly, seek the help of an attorney or escrow officer to take on the task of handling the paperwork for the wraparound.
5. After the selling of the house is complete, make sure that you continue to pay off the original loan.
If you do not have a mortgage: If you have paid your mortgage loan off and own it straight out, here the steps that you should take to have a successful sell.
1. Come to an agreement with the buyer on a purchase price that you both can live with.
2. Ensue that the buyers of your home are pre-qualified for the loan.
3. Get consent from the buyers to contact their lender. Question the lender about the credit rating your buyers have and what would be the interest rate they would receive if they were giving the buyer the loan. Characteristically, the seller-financed interest rate should be somewhat over the market rate.
4. Have an agreement with the buyer on the interest rate and the length of payments.
5. Figure out the mortgage payments. In order to accomplish this, there are computer programs that will compute the running amount of interest and the principle paid, in addition to the remaining balance of the loan. Another, option is to acquire from the lender for a printout.
6. Sign an official contract including the price, the loan total, the interest rate as well as terms.
7. Create an escrow account with a title company or attain a real estate attorney to deal with the paperwork.
Though it may not be easy, you can complete these tractions successfully. By following these steps, the selling process of your home should go smoothly.
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