Creative Seller Financing

[Jason Priegnitz]

How do you do seller financing when the seller currently has a mortgage on the property?

[Avery Rustad]

"Using A Lease Purchase

One way to utilize seller-financing options if there is a due-on-sale clause in place for the original mortgage is to conduct a lease purchase, which is sometimes known as a rent-to-own agreement. Under these agreements, the potential buyer agrees to lease a home at above-market rent. The purchase price of the home may or may not be set before the actual sale, and the surplus amount that the potential buyer pays each month is credited as a down payment against her future purchase of the property. After a set amount of time, the potential buyer obtains financing on her own and uses that to complete the purchase of the home. Since the change in ownership doesn't actually occur during the lease time, these agreements do not violate due-on-sale clauses.

There are many things to think about when considering owner financing, particularly if the home is already mortgaged, to make sure that both buyer and seller are protected and acting legally."

This is taken from https://budgeting.thenest.com/can-house-mortgage-sold-owner-financing-21118.html#:~:text=Using%20A%20Lease%20Purchase,home%20at%20above%2Dmarket%20rent. and should provide with you with one idea of how to get around the mortgage issue.