Buyer’s Pros and Cons: Seller-Financed Mortgage Contract

Are you considering buying a home through a Seller-Financed Mortgage Contract with you getting immediate rights to the Deed while the Seller takes a mortgage interest in the property? Review the positives and negatives to consider before you begin.

Pros for a Buyer in a Deed-for-Loan Real Estate Sale:

• Buyer obtains title or ownership of the property at the outset of the transaction, without waiting until all payments are made.

• Buyer does not run the risk of the Seller placing another mortgage on the property or selling the property during the time that payments are being made or transferring ownership in the property, as Buyer takes immediate Deeded ownership.

• Buyer avoids many of the closing costs associated with a bank financed loan.

Cons for a Buyer in a Seller-Financed Mortgage Contract Real Estate Sale:

• The Seller usually receives a premium in regards to the total purchase price or the interest rate charged, as there are no banks competing to finance the sale and the Seller has some risk that justifies such a premium.

• As with any real estate purchase, if payments are not made in full to the Seller, the Buyer will be foreclosed upon and will lose the value of the investment.


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