It can be tough to get a mortgage loan these days with increasing credit requirements. Even buyers who have excellent credit are having difficulties getting approved. On the flip side, many people anxious to sell their North Carolina property can’t get qualified buyers to the closing table. If you are interested in taking out the middle man and controlling more of the process, you may want to consider seller financing.

If you have never heard of this before, basically the person selling the home lends the potential buyer the money to purchase the house. The seller becomes the mortgage holder and the buyer sends monthly mortgage payments directly to the seller. The transaction is usually completed using a promissory that states the interest rate, length and terms of the loan and default consequences.

In today’s market, sellers may need to get their homes sold quickly, and seller financing is a way to get the property sold faster – it opens up the market to more buyers and the paperwork process moves quickly.

Some advantages to doing this type of financing:

  • Faster closing – Sellers and buyers can avoid long waits for loan committee review, underwriting and legal review.
  • Lower Closing Costs – buyers don’t have to shell out additional money for bank fees and other closing costs associated with a traditional mortgage.
  • Flexible down payment – most sellers are willing to take less money down than lending institutions.

Of course this is not for everyone and many home sellers may not be in a position to where they can offer financing. On the downside, there is risk involved on both sides – the seller is taking a risk on someone who may have some shaky payment history or poor credit, and the buyer is dependent on the seller to have been upfront on the terms of the sale (like making sure that the seller’s lender approves the arrangement). As with any large transaction, especially a property purchase, both parties should consult with a real estate attorney and financial expert to make sure that the transaction is legal and is financially sound. If you are ready to buy and can’t find a lender, seller financing may be worth checking out!

 

 

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