When it comes to the home mortgage loan, the first thought that comes to mind includes lenders and credit checks. However, this does not always have to be the case. Seller financing is another option on the home mortgage loan.

What is seller financing?

Seller financing means that rather than going through a bank for the home mortgage loan, the person selling the house finances the buyer. An interest rate can be set, and mortgage loan papers are available for seller financing (you usually have to pay a small fee for state-specific do-it-yourself forms online). Then, the seller receives the agreed-upon payments over time, until the loan is paid off.

Advantages of seller financing

There are some advantages to seller financing. First of all, no credit check is necessary for seller financing (although some sellers do run a credit check). If you are selling your house, you are likely to do so faster, since your pool of eligible buyers is wider. And, if you are selling, you can receive payments over a period of time and earn income in the form of interest.

Disadvantages of seller financing

There are also challenges that result from seller financing. A home mortgage loan that the seller is financing means that he or she also takes on the risk of default. The paperwork and legwork involved in making sure the title is properly handled, as well as ensuring that everything else is in order can be time consuming.

Before you decide to take the step of seller financing, carefully consider your options, and weigh the risks. Some people might find this a good fit while others might find it easier to just let a bank handle everything.

home mortgage, personal finance, financial planning, finances,
financial goals, home mortgage loan, seller financing, credit checks