Q & A: Seller Financing

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  1. How are the rates set for seller financing?
  2. What is seller financing?

How are the rates set for seller financing?

The interest rates for seller financed loan are negotiable. The rate is agreed upon by both the lender and the borrower, and therefore it will vary for each transaction. Generally, the rate will be below the current market interest rate, but above the rate sellers could obtain with standard investments.

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What is seller financing?

Seller financing is a loan offered by the seller to the buyer, rather than the buyer obtaining the home loan through a traditional lender. Seller financing can be beneficial to buyers who are unable to obtain conventional loans, and sellers often benefit from tax deductions from the loan. There are also risks involved with seller financing, both for the buyer and the seller, and therefore entering into such financing should be done with the consultation of financial and legal advisors.

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