Seller financing is a type of loan where the property seller finances the purchase for the buyer. In this arrangement, the buyer pays directly to the seller but with interest. So opt for seller financing? Here are three reasons why:

You have a poor credit score or don't qualify for a traditional loan

Sometimes financial challenges like foreclosures and bankruptcy

In some cases, buyers might have a low credit score due to financial challenges, such as bankruptcy or foreclosure. In other cases, buyers might have a limited credit history, which makes it difficult to qualify for a loan. In either case, traditional lenders are unlikely to approve these buyers' loans.

With seller financing, the seller doesn't have to rely on the buyer's credit score or financial history. Instead, they can decide based on the buyer's ability to make payments and their financial situation.

In addition to helping buyers with poor credit scores, seller financing can be a good option for self-employed buyers with irregular incomes. This makes qualifying for a traditional loan difficult because they don't have a steady income stream.

You want to purchase a property that is difficult to finance

This might be the case for unique properties or requiring major repairs. For example, purchasing a historic home that needs extensive renovations might be difficult to find a lender willing to finance the purchase.

In these situations, the seller might be more willing to offer to finance because they understand the property's unique qualities. Seller financing can also be a good option for buyers willing to purchase a property that doesn't conform to traditional lending guidelines. For instance, a property zoned for commercial use but with a residential property might be difficult to find a lender willing to finance the purchase.

You want to avoid traditional financing fees and restrictions

When you apply for a traditional loan, you will typically have to pay closing costs. In addition, traditional loans often have restrictions, such as prepayment penalties and strict repayment schedules.

Seller-financed sales allow you to avoid cumbersome regulations and reduce closing costs. Often, sellers only require a minimal down payment to secure the transaction and may not even ask for closing costs! You can customize the interest rate and the down payment to suit both parties during negotiations which is an excellent benefit for buyers and sellers.

However, this type of financing has short-term spans, typically five years. After the period, a balloon payment is due. This counts as a credit to the buyer since it has some home equity and improved creditworthiness enough to refinance with a traditional lender.

Work With Seller Financing Experts

Whether you have been denied a traditional mortgage or are facing foreclosure, seller financing can be a great solution for purchasing a home. Manifest Realty Group specializes in helping individuals and families avoid foreclosure and achieve homeownership through seller financing. We have experts that understands the complexities of seller financing and can help guide you through the process. Contact us today and get insights on seller financing even after foreclosure.