~ Dave Ramsey
A majority of the homebuyers are able to land a mortgage comfortably. However, if the things didn’t go as per expectations for you, you can always choose seller financing to fund the transaction.
Seller financing is an alternate financing option under which, the seller finances the purchase transaction for the new homebuyer. It is quite similar to a regular mortgage where the seller serves the role of your lender. The seller can finance the entire amount or just the amount that the buyer requires to close the deal.
Seller financing may sound like a risky deal for the existing homeowner and it is to some extent but it offers incentives to counterbalance these risks.
If you are the seller in a seller-financed purchase, make sure to check the credit history of the buyer before offering a loan. The buyer should be able to make timely mortgage payments.
Seller financing comes into play only when the buyer requires financial aid.
For the buyer, it makes sense to find out the current title of the property and any existing loans on the house. At the same time, make sure to ask for a professional home inspection before purchasing the property.
It is best to hire an attorney that specializes in seller financing. You can get all the paperwork done in the correct format and avoid any legal obligations in the process. For sellers, it makes perfect sense to use the property as collateral to get the additional protection in case of a default.