Orlando Real Estate News

SOLD:  How to attract more Orlando Florida home buyers with seller financing

Like honey draws bees, creative financing can draw home buyers in Orlando Florida to the doorstep of your home for sale. Many Orlando area home buyers are motivated to buy but need help meeting mortgage-qualification rules, especially today. You can help a prospective home buyer finance the purchase of your house (and speed your sale) in several creative ways. 

Seller holds first mortgage.

When selling a home in Orlando Florida, you can lend the home buyer the money, pocket the interest payments, and hold the mortgage on the property, as long as there is no current mortgage. The tax benefits are you may be able to pay income tax only on a percentage of the principal and interest that you get each year. You probably will want a 20% down payment (to discourage default on the loan), and you'll need an attorney to draw up a deed of trust and promissory note.

Seller holds second mortgage

You can help fill the gap between other sources of financing and the sales price of the house. The second mortgage is usually for a smaller amount than a first mortgage but is riskier since it could be wiped out by defaulting on the first mortgage. Real Estate financing can be tricky, so be sure to have your interests legally protected by your attorney.

Assumption of the existing mortgage.

On older mortgages, the buyer can sometimes take over the obligations of the existing mortgage at the stated interest rate for little or no additional cost. Often the seller takes back a second mortgage for the difference between the sales price and the balance of the old mortgage. If the sale is "subject to," the seller remains liable for the old mortgage if the buyer defaults.

Wraparound financing.

In this loan, which is a type of second mortgage, the home seller retains the existing mortgage and makes regular payments on it. But the seller lends the home buyer the total sales price less the down payment, often at an interest rate a little higher than the first mortgage rate, so the seller makes some profit. An additional risk for this second mortgage is if the loan is unassumable, the existing mortgage can be called by the lender.

While creative financing may not be as simple as traditional financing, in difficult market conditions a little creativity can go a long way to attract the right buyer. We're here to guide you, so contact your Orlando Florida Real Estate experts today!

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