Seller Financing

Seller financing is sometimes also called owner financing or seller carry back.

Seller-financing arrangements usually involve the buyers securing the largest portion of their purchase money from a mortgage company and getting a smaller second loan from the sellers. For example, they may finance 75% from a lender, put in 15% from savings, and ask the sellers to finance the remaining 10%. The terms and interest rates on seller carry-backs are negotiated on a case-by-case basis. Sellers should ensure that the note protects them to the fullest. They may be able to negotiate a note that provides a better return on their money than 1-to-5 year CD's or treasury notes.

Use common sense when considering such a loan.

A seller or buyer should seek professional advice when considering this option. Many things come into play when determining the terms of such an agreement. They include buyer's credit, buyer's down payment, how soon the seller will need to cash out, etc.

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