If you are selling a house in
which you have a lot of equity, and you don't need that equity to buy a new
home, an owner-financing agreement may benefit you and your buyers.
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, and verify the buyers' income, credit
history, and job stability before making your final decision.
