Owner Financing

[Kelly Williams]

Can someone give me some insight into seller financed deals as far as loan servicing goes?  Do seller financed deals get serviced through a bank or another financial institution?  I am curious how payments on an owner financed sale will show on credit reports.  

I ask because I am negotiating an owner financed sale, and will purchase the property through an LLC. I would like to build credit with the LLC to reefinance in the future. Thanks!

[Bill Gulley]

Kelly, investor A is buying from investor B who is financing the deal. Later, you go to Gold Pot Bank, they do business with investor B and know him. A written verification of mortgage payments is mailed to B and he fills it out, Gold Pot might accept that as any representations that seller makes as to payment history carries legal weight with the bank.

Tax returns shown ability to pay, not timely payments.

Lenders that can not accept the seller's word for timely payments (the seller has a vested interest in the loan being approved, they get their money) must verify payments somehow. Cancelled checks will show the date payments cleared. If your seller tosses your check on the seat of the car, it gets lost, he fails to deposit it on time, you get a late mortgage payment! Late payments within 12 months can keep you from refinancing!

This is why a clearing account needs to be used. Never trust a seller to account for your credit history, being individuals, they can be crooks, but they also die, become incapacitated, got to a hospital, get divorced, take bankruptcy and get sued with all of these matters effecting how they may care for your accounts. :)