Types of “Seller Financing”

  • Seller Carry-back: An owner or seller carry-back is when a seller takes a portion of their equity in the form of a second Mark Stuart Youth Jersey
    trust deed, deferring payment of that equity until a later date and collects interest payments from the buyer.
  • Seller Secondary Financing: junior financing placed on a property at the time of purchase and as part of the purchase price. Some government-guaranteed loan programs do not permit secondary financing, while others place restrictions on it.
  • All Inclusive Deed of Trust: all-inclusive deed of trust (AITD) – a junior mortgage with Devin McCourty Youth Jersey
    a face amount and totaling the actual amount owed under the junior mortgage plus the amount of any Ron Parker Jersey
    senior mortgages. The Reggie Lewis Jersey
    mortgagee collects the total payment from the mortgagor, pays any and all senior mortgage obligations is possible, and keeps the remainder. AITDs Authentic Bradley Roby Jersey
    are most commonly used where the senior mortgage interest rate on a property are low. A purchaser of the property may wish to keep the existing mortgage in place, rather than obtain a new loan at a higher rate. Alternatively, the seller of such property’s may wish to charge a premium over the actual cost of the underlying debt.
  • Wrap-Around Loan: wraparound mortgage – (also called a “wrap”) a junior mortgage having a face value of the amount it secures plus the balance due on the first mortgage. The mortgagee collects payments based on the face value of the wrap-around mortgage, makes the payment due on the first mortgage, and keeps the difference. The “wrap” often carries a rate of interest higher than that of the underlying first mortgage, thereby profiting the holder of the wrap. Wraparound mortgages are generally used in an environment in which interest rates have risen rapidly, making it attractive to leave an older low-interest mortgage in place when the property is sold. The seller is typically, but not always, the maker of the wrap. Note that a due-on-sale clause in the underlying first mortgage may affect this strategy.

Subject to:

  • Lease Purchase Option: An agreement that gives a renter the choice to purchase a property during or at the end of the rental period. As long as the lease option period is in effect, the landlord/seller may not offer the property for sale to anyone else. When the term expires, the renter must either exercise or forfeit the purchase option. A lease option gives a renter/potential buyer more flexibility than a lease-purchase agreement, which requires the renter to purchase the property at the end of the rental period.
  • Land Contracts: Land contracts do not pass legal title to the buyer, but give the buyer equitable title, meaning the buyer has a right to O. J. Simpson Youth Jersey
    obtain absolute ownership to a property even when legal title is Mike Scott Womens Jersey
    held in Carlos Correa Womens Jersey
    another’s name. The buyer makes payments to the seller for an agreed-upon period and upon final payment, the buyer receives the deed.
  • Extended escrow: This is where you simply agree on the terms of the sale, open escrow and keep it open until the sale is complete regardless of how long the agreement is.

Installment Sale : real estate purchase arrangement in which periodic payments are made by the buyer to the seller over a period of more than one tax year. Usually, the goal is to minimize the capital gains tax for the seller.

Subject to: the goal of a subject-to is to acquire a property with no money down. This is very rare.