INVESTOR RESOURCES
SELLING
5 Logistical Tips of Seller Financing
PUT MORE MONEY IN YOUR POCKET WHEN YOU SELL
by Chris Sexton, Nationwide Secured Capital
Seller financing is a great tool that can put more money in your pocket when you sell a property and help you sell faster when market slows. Last month we discussed how this tool does that. Here are some tips on how to create seller financing as part of your proper- ty sale. Advertise your property for sale with “Seller Financing Available.” You will at- tract more prospective buyers willing to pay full price. Have an idea of terms you will offer. You are in the driver seat; you deter- mine the interest rate, the length of loan, down payment and whether the loan will have a balloon payoff date. Borrowers almost always want the lowest payment, lowest interest rate and lowest down payment they can get. You, as lender, want the maximum for these parameters that buyer can afford in order to make your loan more secure and give you the best return. You can request more info at the “Sell your home faster” link on our web site. When writing the purchase agree- ment, you can add language that
permits renegotiation of loan terms later when you have received the seller credit income and employment information. If unfavorable/ higher risk information surfaces you can withdraw or change the loan terms you offer; e.g., seller finance loan terms are subject to re - view of buyer credit, income, employ- ment, and completed loan application. If unfavorable/ higher risk informa- tion surfaces you can change the loan you offer If unfavorable/ higher risk information surfaces you can change the loan you offer or exit the contract. Know the regulations that apply. Seller finance loans on real property enjoy minimal restrictions. Do know the maximum interest rate allowed for mortgage loans in your state and avoid usury. If you are selling to a buyer who will occupy the property as their princi- pal residence, then more regulation applies. You must be sure your buyer has adequate income to pay the loan; you must also follow Dodd Frank reg- ulations, and SAFE Act requirements. You should check if HPML (high price mortgage loan) requirements will apply for your interest rate. Using a licensed mortgage loan originator is required if you are doing
more than three loans in any 12- month period. Include essential terms. Promissory note must state interest rate, and payment amount and pay- ment due dates. • Adding late date and amount of late fee is advisable. • Adding an increased default rate is advisable. • Mortgage or Deed of trust must contain correct legal description of property and require insurance and tax payments be kept current. • Further language to allow lender to pay and demand repayment for amounts that threaten the lien position of the loan. Seller financing offers another exit strategy to real estate investors and businesses, and there is an active market of buyers for these loans should you need liquidity. You can sell part or all of your seller finance loan for lump sum cash quickly. •
Chris Sexton is a co-owner and Sr. Vice President of Note Purchasing at Nationwide Secured Capital, a reputable note brokerage and
investment firm that purchases seller finance loans. Chris has been buying and brokering notes in the seller finance loan industry since 1987.
thinkrealty . com | 73
Made with FlippingBook Online newsletter