As buyer: Considerations for Seller Financing

[Charles Hannah]

My partner and I are attempting to purchase our first investment! We are qualified for a conventional loan but were offered seller financing and would appreciate some independent input from the community.

Conventional loan: 25% down, 6% interest, 30 year, 3.675 points, PITI ~1420

Seller Financing: 25% down, 4.95% APR, 25 year amortization with a balloon payment July2026, no points, PITI ~1420

The numbers favor seller financing but we'd love input on questions to ask, factors to consider, and any other nuances with seller financing we may not be seeing.

Thank you!

Charles 

[Jocelyn Kaufman]

This happened to me before. 

I had a conventional deal ready to go and then the seller wanted to seller finance for tax purposes. The deal was way better in the seller financing deal and so I went with that. 

Make sure you get a good lawyer that knows what he is doing with seller financing. 

Also, if the seller is wanting the seller financing deal then you may be able to negotiate more. I would ask if they would drop the balloon payment off the deal to make it a more straightforward contract. 

I hope this helps.