Some Sellers Offer Financing to Get Deals Closed Buyers who have a foreclosure or bankruptcy in their credit won’t be a likely candidate to secure financing from a bank anytime soon for a home purchase. As a result, some sellers are stepping in to offer seller financing to get their home sold.
Seller financing, once popular in the 1980s when mortgage interest rates spiked to 18%, is making a comeback. Last year, 52,991 U.S. homes were purchased with various forms of seller financing, a 56% jump from 2008, according to the REALTORS® Property Resource LLC. In 2010, such deals made up 1.5 percent of all transactions.
One popular form of seller financing is known as a land contract, which is when a buyer takes possession of the home but the seller holds the title until the debt is completely paid off. The loan’s terms, such as down payments and interest rates, are negotiable. These arrangements usually consist of a balloon payment in five to 10 years, which is when buyers will have to repay the seller or lose the home, along with any money they already put into it.
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