Needs more details on seller financing

6 Replies

@Edisson Casseus

Depends on what you mean by seller financing. If you mean you take possession of the property and the previous owner still has a mortgage on it, no, because you don't own it.

If you get title and you sign a promissory note to the seller to make payments (essentially the seller becomes the banker), you can get a loan for two situations: 1> a loan with a bank to refinance out of the promissory note, which pays off the seller what you owe, and places a new lien on the property. 2> Potentially a rehab or 2nd mortgage "IF" you can find a bank willing to take a 2nd position on the property. Many don't like to do that anymore. If you have the equity, a HELOC might work.

I HAVE had this work, but it is NOT very common. 

I bought a property that I was going to flip with 100% 'seller carry'. This was a 85K purchase on a place that was worth 140K and when I was done worth about 180K. 6% interest and a balloon in a year. 

I had to come up with the fix up funds myself. I considered taking a HELOC on my primary for the 40K or so needed, but found a Private Lender (remember to tell EVERYONE what you are doing, you never know where you will find what you need!) who would lend it to me in exchange for a second position mortgage.

When I was done with things I actually decided to move into it myself as I came to love the location, and relatively inexpensive housing cost for the area. I simply refinanced it into my primary mortgage. I could have just as easily been refinanced into loan suitable for a rental property. 

The key is finding that person to do the second, or to have the HELOC capacity to go that route.

Dan Dietz

@Edisson Casseus if the seller owns the property free and clear then sure you can rehab and refi in a seller finance situation. The seller just becomes a lender and you would be the property owner. If they don't owe it free and clear it becomes more complicated, but so long as you get title in the transaction you own the property. Even if you DON'T get title there are still particular transaction types by which you could still accomplish what you're aiming for. In short, there may be ways to do what you want you just have to make sure you do it right.