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March 5, 2009
Seller financing
Does anyone know much about seller financing? If we are able to sell our co-op, we will be short 20% down on a larger place by about 5-10%. Wondering if seller-financing would be an attractive option for both parties in a situation like this, provided the seller doesn't need the equity all at once. For example, if someone doesn't "need" to sell to buy something else, but would like to move on from the property, would they be willing to finance a loan for us? What are the benefits and risks on both sides? Thanks for any insight.
Comments
yes, loans are available for all. but all depends on your budget and needs.
Equity Loans
Posted by: talkloan at March 5, 2009 12:54 PM
hmmm, buyer and seller both beware.
If you buy with seller financing, expect a higher interest rate from the seller, and be very careful to ensure you get a clear title. You won't have the expertise of the bank attorneys and title people that they employ. I also don't know how this works in co-op or condo situations, or if it is even allowed for the co-op/condo seller.
The seller needs make sure that the buyer will actually make the payments, and if not, that the buyer will return the home undamaged. Sometimes buyers walk away because they don't care about losing low down payments or refuse to leave, or damage or steal appliances or fixtures - and the foreclosure process can take a long time and cost big bucks...
Posted by: appoggiatura at March 5, 2009 1:35 PM
I purchased my first building in 1999 with seller financing. for me it was ideal as I had no established credit and only 12% down ( 7 unit building). at that time we payed 9% interest, which was 2% above prime. There are some upsides, closing costs were low and I believe I did not pay the typical 1% city and state mortgage tax. of course, you should only proceed with a real estate lawyer who is familiar with these types of arrangements. After a few years of ownership and a drop in interest rates, I finally refinanced with a traditional lender and the owner was paid off. for me , this experience was a positive one.
Posted by: owner12 at March 5, 2009 2:36 PM
Do you plan on doing seller financing for the whole loan or a 2nd position to make the ends meet? I only ask because traditional banks will not lend with a 2nd lien from the seller. 2nd liens in conjunction with a coforming loan need to be either from a lending institution or a government sponsered agency.
Posted by: Adam Dahill at March 5, 2009 2:51 PM
Adam, we would finance the whole loan via the seller, at least, if I am understanding the process correctly. It seems like if the terms were amenable to both parties, the buyer could later refinance with a traditional lender. Thanks for your perspective owner12. May I ask how you approached this scenario with your seller back in 99?
Posted by: wishinone at March 5, 2009 3:56 PM
Then you are good to go. Let me know what kind of terms he is giving. I'm just curious what they are offering these days.
Posted by: Adam Dahill at March 5, 2009 4:26 PM
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