Seller financing interest %

[Philip Velleux]

What are seller financing interest rates in wi , more specifically west central wi , I have never bought through self financing, what questions should I ask and what's a fair interest rate for them to ask?

[Bill Gulley]

Interest is a reflection of the risk assumed by a lender, it's not really arbitrary, but in seller financing assessing risk is beyond the scope of the average seller. It is negotiable and there is no rule as to what might be agreed, however, overcharging can get into usury laws at the state level and predatory lending on the federal level. 10% is a pretty well accepted rate on the higher end. You also should avoid matters where the IRS applies imputed interest taxing the lender.

If the borrower introduces seller financing, you can be responsible for what you tell a seller as to terms, rates, taxes and their ability to lend. The borrower is the "Maker" of the loan and can be the "Originator" as well, so take care in what you try to do. 

Also, seller financing does not add value to a property, the value is only what alternative financing might cost. Never overpay as you'll be giving away future appreciation you need to meet that obligation if there is a balloon payment. 

Happy holidays! :)