Seller Financing: The Easiest and Cheapest Home Loan

By Raymond Stoklosa · April 9th, 2008

The days of “no documentation, no verification, no qualifying” financing are over. Lenders like BofA and WaMu have exited the wholesale mortgage business. Home Equity Lines of Credit (HELOC) are more costly and more difficult to obtain so borrowers who need to borrow more than 75% of the value may be left out in the cold.

So is there anything left that sellers can do to bridge the financing gap and get their homes sold? … Yes, there is and it’s called “seller financing.”

In its simplest terms, seller financing means the seller takes a promissory note for some portion of the down payment and secures it against the property being sold. Usually, the buyer obtains a first loan and the seller has a second loan for which he or she receives payments on a scheduled basis. Seller financing has typically several advantages for the seller:

The seller gets their home sold
The note earns above average interest rate
The note is secured by the property
The seller receives a regularly scheduled stream of income
The seller’s taxable profit is spread out over time
With the mortgage business in a period of adjustment, remember that by being creative, but responsible, you can still get your home sold.

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