Are seller backed mortgages making a comeback?
DONOTCHANGE
It seems surprising to some that the seller held mortgages are making a comeback despite the chaos reigning across much of the United States in the real estate market. However, with more and more people finding it harder to get together a down payment and a smaller first-time mortgage, sellers are lending an old-fashioned helping hand.
The way it works is that the seller takes on a second mortgage to cover part of the closing costs, which the buyer will reimburse at a later date. This means that the overall mortgage for a first time buyer is considerably lower, giving them time to get on track.
When the close occurs, the buyer signs a note that promises payback and a subsequent one for the seller. Monthly repayments are made to the seller, with the final balance being paid in up to two years. Then in open court, the seller with sign that the second mortgage has been satisfied and only one mortgage is left.
The seller held mortgage may not be something that every seller can do. However, many doing it, ultimately it benefits them as well as they have additional credit and holding that second mortgage will raise their credit score dramatically once it has been fully paid.
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