Seller finance and amortization

[Beth Lesage]

This group is always full of great advice. Can you help again?

We are selling and will be offering owner financing. The terms will include monthly payments on a 15 year amortization. What happens if the new owners wants to pay more then the preset amount? How do I/we keep track of amortization?

[Cliff Benner]

@Beth Lesage, you can create an amortization table and put it in your contract to be agreed upon to start with. 

For that Amortization Table though, Include a Column for Additional Principal Payments, and make the Running Balance Column Equation: Prior Balance-Principal Payment-Additional Principal Payments = New Balance. Then your interest calculation should be calculating interest off the Prior Balance and the whole sheet should adjust each Additional Principal Payment. Print this to a PDF and you can have both parties sign it saying they agree to the new balance every month, if you want. 

Good luck!