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What is seller financing?
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Instead of securing financing from a bank or mortgage lender you can agree with the seller that he will lend you money for the purchase of his property. In reality no money changes hands, the seller purely retains a deed of trust on the property. If there is no other financing involved he will have a first rank deed of trust.
If you were to default on your payments to the former owner he can go through the process of reclaiming his property. You would be at risk of losing the property and all moneys you have put into the deal.
Seller financing has its advantages and disadvantages. It is very well suited for land deals as the new owner can not really destroy anything. When entertaining owner financing on a home the seller is at risk of the buyer altering the structure or even demolishing it and then defaulting. |
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