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Seller Financed Real Estate Deals – Winston Rowe and Associates
As unusual and unfamiliar it is to most people, seller financing can be a helpful option in challenging real-estate markets.
By: Winston Rowe and Associates
They draw up a promissory note setting out the interest rate, schedule of payments from buyer to seller, and the consequences should the buyer default on those obligations.
Unlike a sale involving a mortgage, then, there is no transfer of the principal from buyer to seller, but merely an agreement on repaying that sum over time.
Closing costs are indeed lower for a seller-financed sale. Without a bank participating, the transaction avoids the cost of mortgage or discount points, as well as origination fees and a host of other charges that lenders routinely level during the financing process.
There's also greater flexibility, at least ostensibly, about the loan provisions, from the required down-payment to the interest rate to the term of the agreement.
For all the potential pluses to seller financing, transactions that use it come with risks and realities for both parties.
This article was developed by Winston Rowe and Associate a national consulting firm. They can be contacted at https://www.winstonrowe.com