Seller Financing?

[Vanda]

I am not sure if I will ever buy a home again, but if I do, I was wondering about seller financing. It will probably be over a year before my house is sold and then I'd have to wait 3 more years for an FHA loan. Has anyone tried seller financing?

[StartingOver08]

Yes, in fact I have a seller now willing to hold a 90% LTV loan at 5.25% fixed for 15 yrs, no balloon. The house is a very nice home in a gated community.

[whoops08]

Yes, in fact I have a seller now willing to hold a 90% LTV loan at 5.25% fixed for 15 yrs, no balloon. The house is a very nice home in a gated community.

How does seller financing work? do you get to deduct the mortgage interest like a regular bank mortgage?

[StartingOver08]

Yes, seller financing means the seller 'holds the paper' rather than a third party institution like Chase. You have a note and a mortgage just the same as the one you are used to having with a third party. The seller may or may not hold the escrow, that is determined during negotiations. The interest and real estate taxes are tax deductable. Everything is the same with the exception that you pay the lender direct rather than going thru a servicing company like Chase or EMC or Wells Fargo etc.

[imoverit]

How would someone find a person who was willing to hold seller financing? Is it more word of mouth or is there a special "box" on an mls listing?

[StartingOver08]

There is a special box for it on the MLS listings, at least there is in our area. Most experienced Realtors can find seller financing for you. Since the property has to be owned by the seller with no underlying mortgage, there is not a huge selection of properties. Also, oddly enough, the higher the price range the more likely the sellers will offer financing.

[hereforinfo]

You can also scour Craigslist for FSBO listings that may offer seller financing. But like Startingover said, your best bet is to probably use a Realtor to do the work for you since it won't cost you anything, and they can utilize the MLS. I would also have a real estate attorney look over any contract before you sign. The small fee is worth the peace of mind. Just make sure you get a fair deal and try to negotiate the smallest down payment possible to minimize your risk.

[OneDay]

Be very very carefull with anything on craigslist, more often then not they just want you to fill out a credit app and then you are screwed.
It is a scam to get all the info they need to steal your identity.

There is one add pit there that has a too good to be true offer on a rental or a house. Once you email them they ask you to just fill out a credit app and will not tell you the location of the property until you are "pre approved".
SCAM SCAM SCAM.

be aware.

[frogger]

Seller financing can be good, or it can be a ticket to a total disaster. I've seen many seller financing deals where the "rent to own" tenants came in with a big down payment, spent many $$$$ on repairs an upgrades to the house, and then the seller filed for bk.

Your seller is only as good as his financial state. Be very, very careful.

[StartingOver08]

Rent to own and seller financing are two different things.

1) Seller financing = deed is transfered to the buyer at the time of closing. Buyer puts down some funds and seller holds the paper (normal note and mortgage, recorded). Buyer makes payments to the seller. Seller can sell note at a future date just like regular lenders. The important part here is that the buyer has the deed just like a regular transaction (it IS a regular transaction). The lender/seller would have to go thru the foreclosure process if the buyer stopped making payments just like a third party institutional lender.

2) Rent to own = deed is NOT transfered to the buyer until the entire property is paid. Buyer puts down some money and makes payments to the 'seller' until the entire property is paid off. High degree of failure in this type of financing. The deed stays in the sellers name until the very end.

[frogger]

Rent to own and seller financing are two different things.

Very true. True seller financing with the transfer of deed is good. Owner financing and no transfer of deed can be a disaster.

Thanks for clearing that up.

[Carter]

Be very careful of appraisal issues too. Which is the situation I am in currently. I moved in 3 yrs ago and now I am ready to obtain my own financing and the house is upside down therefore I can't get my own mortgage. I'm wondering if the seller can come after me for the contract price? There is no language in my contract whatsoever about appraisal issues.