Benifits and downfalls of seller financing

[Erik Schubert]

What are the up and downs of seller financing?

I'm thinking about asking a seller if they are interested in holding the mortgage, but I know I will need to educate them and myself on the topic.

I have no experience with seller finanacing.

[Bill Gulley]

Originally posted by @Drew MacDermott:

Originally posted by @Bill Gulley:

Search for loan servicing and select a servicer to administer the loan.

You get a cheaper loan, no points can be charged or other expenses to obtain the financing that will effect the APR.

Bill,

I am wondering if you meant for these two thoughts to be together?  Do you mean with a local loan servicing company they won't need to charge points, etc. because they are not a large banking institution regulated by red tape?  You had a great point, too, about not paying more for a home just because you are using seller financing.  Thanks!

Getting a loan servicer has benefits for both parties and well worth it. "Local" servicer might be nice if there is one, they don't need to be local, there are national servicers that will work just fine. A servicer will charge a fee, it can be paid by either party or both. Servicing fees are not part of the APR unless the borrower is required to pay them.

A seller financed note is financing equity based on a sale price, not cash, the sell is not to charge points or fees for making the equity loan available. A RMLO may charge a point or some fee to underwrite a seller financed loan, that is not going to the lender, but for a required service.

Points on a loan are pre paid interest, you can't have pre paid interest on equity out of an installment contract, "installment contract" is one financed by the seller of the goods (installment loan) regardless of title conveyed, title may or may not be conveyed. :)