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Here are some options:
Sellers can use the buyer's downpayment as their downpayment on future financing.
They can use the interest rate they charge the buyer to offset the higher cost of making a lower downpayment.
They can use the buyer's monthly payments to offset their own monthly mortgage payment, similar to receiving rental income on an investment property.
Also, advise sellers of the costs they would incur if they can't sell their property. These include taxes, insurance, loan interest, the opportunity cost of investing the equity or using it to pay down debt, and missing a good deal on the property.
Sellers can qualify for their new loan as if they have notes-receivable income. They provide a copy of the financing documents to verify the payment amount and the remaining term. The escrow company provides copies of the documents and verification of the buyer's payments. Payments often must continue for more than three years at the time of their mortgage application. Extending the agreement if needed to meet this requirement is a possibility, too. Plus, buyers often welcome a small extension as long as they maintain the flexibility to prepay.
Many lender account executives, customer service representatives and underwriters do not know the specific requirements to refinance seller financing or to underwrite buyers who hold seller financing. You can help them and stand out from the crowd.
Locate each lender's applicable underwriting guidelines and ask experienced underwriters questions. You also must be diligent and monitor underwriting guidelines for changes that can impact your clients.
It takes little time to facilitate a seller-financing transaction. Most of your time will be spent working with buyers and sellers to show them how they can qualify for their next loan, thus setting the stage for future business.
Todd Huettner is president of Huettner Capital, a residential and commercial real estate financing broker. He specializes in complex transactions, multiple properties, wealth management and divorce-related issues. In addition to possessing a master's degree in business administration, Huettner has more than 15 years' experience in the finance, mortgage and real estate industries. His articles
www.toddhuettner.com" target="_blank">www.toddhuettner.com. Reach him at (303) 758-7402 or firstname.lastname@example.org.
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