Seller Financing: Tips for Home Sellers
Seller financing has long been a viable strategy for home sellers who prefer monthly cash flow to a lump sum payment on the sale of their home. Yet some sellers are uncomfortable with the idea of carrying a mortgage for the buyer. Here are some suggestions that can increase the seller's comfort level:
· Require a large down payment, maybe even as much as 25 percent, from the buyer.
· Review the buyer's credit history before sealing the deal.
· Include a provision in the loan agreement requiring the buyer to reimburse the seller for
any collection-related attorney's fees.
· Include a late-payment penalty in the loan agreement.
· Include a prepayment penalty in the loan agreement.
The worst-case scenario would be for the buyer to default on the seller financing. If that happens, the seller can foreclose on the home and resell it to another buyer.
Source: "Pros and Cons from a Seller's Perspective," NoteWorld.com