LOUISVILLE’s

Saturday, August 14, 2010

Seller financing can be an option for some buyers, sellers

When the home you want does not have a mortgage or has one the seller is willing to carry, seller financing can be a great deal for a person buying a home.

Usually, the seller will want 10 percent down, but not always. The interest rate charged could be a point above the lowest bank rate. But one big advantage: The seller usually doesn't require mortgage insurance, meaning the monthly payment will be lower in any case.

The loan can constructed on a 30-year basis. Most seller-finance deals, however last for five to seven years, then are settled with a balloon payment for the balance.

Sometimes, a buyer who opts for seller financing will be in a better position five or seven years down the road and will then be able to qualify for a 30-year conventional mortgage.

When buying a seller-financed property, be sure to get a current appraisal. Get title insurance for a few hundred dollars. It will show any tax liens and any other claims that could affect a property transfer.