Getting a mortgage from a bank isn’t the only way to finance the purchase of a home. In fact, seller-financing in real estate is a hot topic and can often be a viable alternative to a traditional mortgage loan. Here is what you should know about a seller carry-back mortgage and how to sell one effectively.
Seller Carry-Back Mortgages
In real estate, a seller carry-back mortgage falls under the umbrella of owner financing. Owner financing, or seller financing, occurs when in lieu of getting a mortgage from a bank or lender to purchase the property, and the buyer contracts with the seller to buy a house. Once the sale of the property goes through, the buyer is then responsible for making regular installment payments to the seller in exchange for equity.
Generally, sellers tend to benefit from carry-back mortgages because owner-carried financing will attract a larger pool of potential buyers. It also widens their market because it allows people who otherwise wouldn’t qualify for a conventional loan to secure financing. The buyer gets access to the financing they need, and the seller often gets a better rate of return than a money market account or a similar investment.
Believe it or not, but selling a seller carry-back mortgage is easier than you think. What’s more, sellers receive a higher sales price in exchange for offering owner financing. Many buyers are willing to pay extra if it’s their only option of buying a house. The monthly payments also give the seller an additional stream of income until the loan is paid off. In short, these types of mortgages are worth considering.