Straight Talk About Real Estate

While interest rates were in the 4.5 to 5 percent range, most buyers choose to obtain their financing through a financial institution or mortgage broker to take advantage of those rates. Now that fixed rates have risen to almost 7%, we are seeing a come-back in seller financing.

For example,let’s assume the purchase price is $500,000. The buyer puts a 10% down payment of $50,000. A first loan of 80% loan-to-value can be obtained from a conventional lender in the amount of $400,000. The additional $50,000 can be seller financed. The interest rate and term is negotiable. This can be a benefit for both the seller and the buyer. Ther seller can get a higher interest rate than what he would get if he put the money in the bank. The buyer can get a lower rate than a second trust deed from an institutional lender.