- With a seller-financed mortgage, the property owner agrees to sell directly to the buyer, typically without using a third party like a real estate agent. The seller maintains ownership of the property until the buyer satisfies the terms of the sales agreement.
- The buyer benefits from a seller-financed mortgage by being able to acquire a property she might not be able to purchase through more traditional methods like securing a bank loan. The seller benefits by possibly receiving a higher return on her equity, plus interest. Both parties can benefit from lower closing costs.
- Before entering into a seller-financed mortgage agreement, the seller should check the buyer's credit and employment history to guard against possible default. The buyer also needs to research the seller and the property. The buyer could face the possibility of not owning the home, even after fulfilling his obligation, due to factors such as liens against the property that the seller failed to disclose.
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