Seller finance information sheet

[Victor Mammarella]

Hey, BP friends many sellers and agents don't understand seller finance and have a lot of questions.  I made a Q&A to attach to all my offers to help explain the process and make it less confusing.  Let me know what you guys think and if you'd take out or put more info in. Thanks!

Why seller finance?

• This may be beneficial to a seller so they can get the price they will be happy with, while giving the buyer a more affordable option.

How Does it work?

• The seller will receive a down payment that will go directly to the seller and cover their closing costs. The seller will keep the Deed for the contract’s duration and continue to have the mortgage payments in their name. The buyer will make payments directly to the mortgage company including insurance and take out their own insurance policy on the property. Any additional money agreed upon will go directly to the seller. At the end of the contract the buyer will make a balloon payment of the remaining balance to the seller, which will also pay of the mortgage.

What if the buyer stops paying?

• If the buyer stops paying the contract will be terminated and the right of possession will go back to the seller. The seller will keep the down payment and any additional payments made as this is nonrefundable.

Will this affect me getting another loan?

• · It is unlikely to affect your next purchase. The monthly payments will cover the existing mortgage. This will cancel out the mortgage debt for your debt-to-income ratio. Most lenders think of seller finance as a rental but with much more security due to the down payment. Please verify this with your lender and let them know your plans before making your decision. If your mortgage company does not accept seller financing as income, I will provide a reputable broker that is more familiar with seller financing to aid you in the purchase of your new home.

Will my mortgage be called?

• · This is another unlikely scenario but is important for sellers to verify. When a property transfers owners their mortgage is normally due. However, since the Deed is still in the seller’s possession this is typically a non-issue for most financial institutions and their acceleration clause will not apply. Please contact your mortgage company to verify before accepting the contract.