Seller Financing
If buyers are considering a home with an assumable mortgage at a fair interest rate or if the sellers have already paid their mortgage, remember to consider seller financing. With seller financing, the seller determines the sale price and then acts much like a lender. He or she determines the amount of down payment and the others terms of sale. Seller financing becomes more common when interest rates are high and buying a home is out of reach for many who could otherwise not afford it. But regardless of interest rates, this option helps qualify people to buy who might not be able to qualify for a loan through a lending institution or who may have the income to afford monthly payments but not the cash for a down payment. With seller financing, borrowers whom lenders might consider marginally qualified not only may qualify to buy but also may save money because closing costs are often nonexistent or less expensive than with lender financing. Seller financing is treated as an installment sale for tax purposes, and the seller will be taxed only on the proportional amount of gain received each year. Finally, if the buyer defaults, the seller can take the property back under the contract or, if absolutely necessary, he can foreclose on the property. A seller can also offer a wraparound mortgage to a buyer who already owns a home. With this option, the seller makes a money advance to cover or 'wrap' the balance due on the old mortgage and the amount on the new loan at an interest rate below market levels.
Popular Real Estate Terms
part of the Department of Housing and Urban Development (HUD), which sees that complete disclosures are made for land sales. ...
Professional certification granted by the Institute of Real Estate Management, an affiliate of the National Association of Realtors. ...
When you sign a Listing Agreement with a real estate broker or agent, he or she has a fiduciary responsibility to represent your interests exclusively. However, should another client ...
The definition of low-income housing is any house that is either rented or owned by an individual or family that has a monthly household income that does not exceed a certain percentage of ...
Individual who attempts to maximize his or her profitability by investing which the anticipation that a particular investment will go up in value. A speculator will generally be willing to ...
Ability of the size of the land to accommodate the desired economic purpose. An example is having enough space to build a supermarket to meet the needs of the community. ...
Owner-occupied housing. ...
revising the terms of a loan such as when the borrower is experiencing severe financial difficulties. For example, a homeowner lost his job and seeks relief by requesting the lender ...
The real and personal assets of a person at the date of death. The distribution of the assets to the heirs depends on the provision of the will. If no will exists, the distribution is based ...
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