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What Are The Advantages Of A Seller To Carry A Mortgage?

by admin - July 16th, 2012

The price of houses is increasing rapidly, and buyers find it difficult to close the deal with cash. The sellers are also disappointed when the buyers fail to qualify for a mortgage from the traditional lenders. However, the sellers have an option to sell the mortgage, and at the same time protect their interest as well. Therefore, the seller can finance the house for the buyer as well as hold the loan.

Complete information on the interest:

When the seller holds a mortgage for the buyer, then the buyers are required to pay the interest on the loan to the seller. The interest on the loan can multiply the actual sale price over an extended period of 10 to 15 years. The seller can enjoy receiving cash from the buyer. Unlike landlords, you are not required to maintain the property for the buyers.

At any point of time, the seller can sell the mortgage to a broker according to his convenience. The seller has to sell it at a discount price as the buyer has the cash the seller has been looking for previously.

If the seller can hold the mortgage, then the interest on the loan along with the discounted sales price can increase the price of the property. Therefore, the seller can reap benefit from it.

Know about the seller’s security:

Buyers may default on the payment; as they may meet ill fate like losing a job, disability or other circumstances that restrain the buyers from making payments. However, the seller may face problem for a short period of time. If the buyers default on the payment, then the property can be foreclosed and repossessed by the seller. The normal appreciating value of the property can help to cover the expenses for processing the foreclosure.

The seller can easily sell, foreclose and resell a property continuously as it is considered to be legitimate. If the buyers default on the payment, then the property can be sold or foreclosed again.

It’s not illegal or unethical for a seller to sell, foreclose and resell a property repeatedly. When buyers default on payment, then property can be put on the market again for sale.

Know regarding the eligibility criteria:

Banks and other traditional lenders have strict criteria to qualify for home loan. Sellers who are established can use property for security and may not be strict while holding a mortgage. Remember, your past credit, income and other financial factors may play a major role while determining whether you can qualify for the loan. If the buyers provide a down payment and agree to the repayment terms, then the seller can easily sell it.


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