Buying a home is made more possible with the help of seller financing. Home buyers would usually resort to seller financing if their credit history is less than favourable because of lack of collateral among other factors. This makes them ineligible for a conventional bank-financed mortgage.
Under this kind of financing, the seller would shoulder a portion of the home loan. The buyer would then come to terms with the seller in paying back the loan with interest.
Sellers may charge steep interest rates to finance a home loan. There is no cap to the interest rates sellers may charge and no outside authority governs this kind of loan. Sellers acting as lenders may not always guarantee the best deal for a buyer. Seller financing comes with its own set of risks but it does provide a line for buyers to afford a home loan that banks may otherwise not grant them.
However, under seller financing, a buyer would not be getting any equity or the property deed until they have fully settled the loan from the seller. Sellers may even opt to evict a buyer from a property if the buyer misses so much as a payment to the loan.
It would do well for the buyer to go through a seller-financed transaction thoroughly. The buyer should understand modified payment plans as well as the contract for deed purchase agreements. This would ensure that the buyer would not get evicted later on and lose all the payments he made to the seller.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan