Seller Financing
If buyers are considering a home with an assumable mortgage at a fair interest rate or if the sellers have already paid their mortgage, remember to consider seller financing. With seller financing, the seller determines the sale price and then acts much like a lender. He or she determines the amount of down payment and the others terms of sale. Seller financing becomes more common when interest rates are high and buying a home is out of reach for many who could otherwise not afford it. But regardless of interest rates, this option helps qualify people to buy who might not be able to qualify for a loan through a lending institution or who may have the income to afford monthly payments but not the cash for a down payment. With seller financing, borrowers whom lenders might consider marginally qualified not only may qualify to buy but also may save money because closing costs are often nonexistent or less expensive than with lender financing. Seller financing is treated as an installment sale for tax purposes, and the seller will be taxed only on the proportional amount of gain received each year. Finally, if the buyer defaults, the seller can take the property back under the contract or, if absolutely necessary, he can foreclose on the property. A seller can also offer a wraparound mortgage to a buyer who already owns a home. With this option, the seller makes a money advance to cover or 'wrap' the balance due on the old mortgage and the amount on the new loan at an interest rate below market levels.
Popular Real Estate Terms
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Financial institution that channels the savings of its depositors mostly into mortgage and home improvement loans. It concentrates on originating , servicing, and holding mortgage loans. ...
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Real property located in an excellent area for its designated objective. An example is a restaurant situated near office buildings, on the main boulevard, so it is easy to see, and has ...
Owner-occupied housing. ...
Same as term annuity: Equal period payments or receipts. Examples of an annuity are annual rental receipts from a real estate investment and cash dividends from a real estate firm's ...
A building having one house hold on the first floor and a second household on the second floor. ...
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