Financing a property with Seller Financing is as old as ancient Egyptian history, and possibly even older. Since the beginning of time the purchaser of an item would pay the seller. If the buyer could not pay the full amount, the seller might accept payment over a period of time. The seller would write a “note” which defined the agreement, terms of the sale and payments.
In modern history, seller financing has been popular when bank financing was difficult or not available. The major last wave of seller financing was in the 1990’s as a result of the Savings and Loan crisis. Later, lenders invented the subprime loan which made most seller financing unnecessary. With the current mortgage crisis, seller financing once again is a viable option.
How does seller financing work? The basic concept is that the seller “writes a note and mortgage” upon the sale of his property. The note defines the terms and conditions of the loan, such as interest rate, the payment amount, and other needed information. The payments then go to the seller per the stated terms and conditions of the loan note.
The problem and solution: Most sellers need or want cash today and not spread over an extended period of time such as thirty years for a home loan note. There are Note Buyers and Note Brokers that either purchase the note for cash or find a buyer for the note.
What are the details? It sounds complicated, but it is easier than a bank loan. Note purchase companies such as AmeraCapital have been assisting note buyers and sellers since 1993. AmeraCapital has the software programs to create a note conforming to the laws in your state. The closing transaction will be held at a local title and escrow company that will disperse all the monies and file the documents at the local county courthouse.
When the note is sold, AmeraCapital will either purchase the note or arrange the sale to a third party. The transaction is completed at a local title company who disperses the funds.
Our past customers agree that the procedure is less complicated and much faster than dealing with a conventional bank. If bank financing is not available, seller created financing is the option to consider!
