Seller Financing – Requirements For A Good Deal
Owner financing is an alternative method of seller your home, where you the homeowner enters into a mortgage contract with a buyer who wants to purchase your home. Owner financing usually yields full market price for the home and a good rate of return. Here are 6 ways to insure that your risk is minimized.
1. Ask for a cash down payment of at least 10% on the purchase of the home.
2. Ask for additional collateral. If the buyer does not have the required down payment and you feel comfortable with the transaction, proceed as planned be require additional security in place of the down payment such as a car title.
3. Check the buyers credit. Don’t take the buyers word for it; get a copy of their credit report. Get the buyer to provide you with a copy of their credit report. They can get one on the internet from Equifax or one of the other major national providers.
4. Trust your instincts. It has been proven time and time again that your first impression is usually the correct one. If you have a funny feeling about the situation, it may be best to walk away and find another buyer.
5. Consider the whole picture. If the bank is willing to loan the buyer 90% of the homes value, and is okay with you holding a second mortgage on the house if the buyer puts 5% down in cash, it’s a win win for everyone. The whole picture is you’ll be getting 95% of the value up front, even if the buyer never pays a dime on the second mortgage. Worst case scenario is that you foreclose on the house that the buyer paid you 95% of the value for.
6. Speak to a lawyer. The courts in your area may take as long as two years to get a foreclosure on a mortgage, but only six months to foreclose on a contract for sale. Determining all the options up front can help you make a wise decision.
This technique can help you sell your home quickly and for full market price. Just get all the facts up front before the closing takes place.