Seller Financing
Definition of "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
The word’s etymology reflects several diverse or seemingly unrelated topics under the same umbrella. As part of everyday discourse, you’ll find the term “omnibus” ...
The definition of property acquisition cost in real estate is the total recorded cost of a piece of real estate after reductions in price, incentives, closing costs and any other ...
To understand what a principal broker is, we have to go back up the family tree of real estate.You do understand all brokers can be real estate agents, but not every real estate agent can ...
Refers to state statues protecting the public against securities frauds of real estate companies. ...
Upon satisfaction of a mortgage or other debt payments, the deed releases property, or a portion of it, form the incumbrance. Often it is used in circumstances where a deed of trust is ...
Subsoil that is beneath the A horizon and above the C horizon of the earth. ...
Person selected by a judge or creditors of a bankrupt individual to handle matters including the sale of the bankrupt's assets, management of the funds from the sale of those assets, ...
Also called profit and loss statement. A financial statement depicting a business entity's operating performance and reports the components of net income, including sales of real estate, ...
To put it simply, acquisitions are a common occurrence in the business world, and they happen to small, medium, and large businesses alike. The definition of acquisition is a company ...
Have a question or comment?
We're here to help.