In a residential real estate transaction, most people borrow money from a lender to cover the cost of the home they want to buy. But there’s an alternative – seller financing – that an increasing number of Lake City buyers and sellers are using. So what does seller financing mean?
Here’s what you need to know.
What Does Seller Financing Mean?
Seller financing is a real estate arrangement in which the seller is the “mortgage lender.” The buyer won’t have to apply for a mortgage through a bank, credit union or other lender. Instead, the buyer signs a mortgage agreement with the seller.
It’s also called owner financing and a purchase-money mortgage – but the term seller financing is the most common.
How Does Seller Financing Work?
If a buyer and seller agree to seller financing, they work together directly. The buyer makes payments directly to the seller.
In many cases, the seller requires a balloon payment after the sale; it typically comes due several years after the initial agreement.
Why Would Someone Choose Seller Financing?
For some people, it’s very difficult to get a loan from a bank or another financial institution. In cases like those, seller financing makes sense. But why would sellers choose it? Generally, sellers choose this type of arrangement because they want to sell the home at asking price.
Are You Buying a Home or Land for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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