Seller Financing
Question: Was thinking about financing my townhome. It seems to me you get quicker >responses. What are your thoughts about seller financing?
Answer: I’m not surprised to hear of better response with that option on the table. From a buyer’s standpoint, I might take advantage of it, but it’s pretty unlikely I’d ever offer it unless the buyer was extremely qualified. Even then, I’d be nervous. I’ve heard too many nightmare stories. It seems from my reading and conversations, that the majority of the time it’s the people with bad credit that want to go this route because they can’t get financing any other way. Mind you, there are exceptions. For example, a friend went to purchase a modest house with a very large lot close to town. The appraisal revealed that the bulk of the value was in the land — not the house. The banks (at least at that time) required a certain ratio of improvement (i.e. house) value to land value, but it didn’t meet that owing to the high value of the land. It didn’t matter that my friend had excellent credit and was putting 25% down in cash. He would’ve been required to put something like 40%-50% down in cash to improve the ratio (on the lending amount). The very kind seller subdivided the lot so that the house and resulting new lot size met the bank’s needs, and after they closed, the seller provided financing on the remaining subdivided land to my friend.
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Filed under: Bad Credit Loan
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