span because they are
class="cap">S eller credit-challenged or have limited
carry back mortgages are financial means. For this reason,
quickly becoming a popular method there is increased potential for
for financing real estate. Using loan default.
this technique, property owners
The main risk to Buyers occurs
provide financing to the buyer. when the Seller does not own the
In some cases the property owner real estate free and clear. If
will carry back only a portion of the Seller owes money on the
the mortgage note and the buyer property and defaults on his
finances the balance through an mortgage payment, there is
assumable mortgage. In other potential for the Buyer to lose
instances, the Seller will their entire investment.
finance the entire note.
The advantages of seller carry
Seller carry back mortgages are back financing generally outweigh
relatively straightforward and the risks. One of the most
can benefit both the seller and advantageous aspects of this type
buyer. However, they are not of real estate deal is it
without risk and precautions provides the Seller access to
should be used when engaging in more potential buyers.
this type of real estate Unfortunately, there are more
transaction.
people with low credit scores and
The biggest risk Seller's face inability to obtain traditional
is the potential for the Buyer to financing than ever before. Offer
default on the loan. Many seller carry back financing opens
individuals who engage in seller the door to Buyers who would
carry back transactions are otherwise be unable to purchase
unable to obtain lending through property.
traditional sources. Typically,
In order to protect both
they are considered high-risk Seller and Buyer, certain legal
documents are required. Although regulated by Usury laws, late
these documents can be drafted fees usually cannot exceed 10
without legal assistance, it is percent of the mortgage payment.
strongly advised to retain the For example, if the monthly
services of a real estate mortgage payment is $1,000, the
attorney. At minimum, an attorney late fee could not exceed $100.
should review seller carry back If you are not well-versed in the
documents to ensure they are Usury laws of your state, it is
legally binding and will hold up highly advised to obtain legal
in a court of law. Although there counsel before signing on the
are certain rules and dotted line.
restrictions, seller carry back
There are many different ways
mortgages can usually be crafted to craft a seller carry back
to suit the needs of both Seller mortgage. If you do your
and Buyer.
homework, conduct due diligence
Before entering into a seller and consult with an attorney, you
carry back real estate may find seller carry back
transaction, it's advised both mortgages to be one of the best
parties conduct background checks real estate deals available.
and obtain credit history
reports. Sellers must adhere to
carry back agreement. Also align="center">
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About the Author:
Simon Volkov is a private Real Estate Investor helping individuals who need to liquidate their real estate and investors who are seeking solid real estate investments. Subscribe to investment opportunities via RSS feed by visiting www.SimonVolkov.com.
Article Tags: seller, back, estate
