Creative Financing with Neighbor's House

[Maria W.]

My neighbor right next door is about to list his house for sale. I want to present creative financing options to him so he could potentially become the bank and I can make payments to him at a lower rate so it's a win-win scenario for both of us. How exactly does creative financing work and how would the sale actually happen? I'm also trying to use his agent to do the deal at 3.25% rather than the normal 3% he might get. Thanks in advance for any help!

[David M.]

@Maria W.

First, why 3.25% for his agent?  you do realize that if you use his agent, he gets the full commission that was agreed between himself/broker and the seller?  Has the neighbor even listed, yet?  Catch him before he signs and you both avoid all the commission fees...

Really, this starts with what does the seller want?  What is the existing lien?  To be clear, with seller financing Title is transferred --- people seem to be posting nowadays with "seller financing" being a catchall phrase.  This will only work if the seller is willing to take a Note.  If they need the cash to buy their next house, live on, etc. then it won't work.  You also need to provide enough cash to satisfy the existing lien, i.e. the existing mortgage.  

When you say "make payments at a lower rate," lower rate to what?  Lets be honest, some of this "creative financing" only "works" because one side is either desperate or honestly misinformed.