| With today's ongoing struggles within the | | | | and 4. ability to set up payroll deductions |
| mortgage industry, you will see more seller | | | | or direct deposit for monthly payments. |
| financed deals than ever. I will attempt to | | | | |
| provide some details on how to structure a | | | | You should also be prepared to hold a second |
| seller financed note. | | | | mortgage for at least 5% of the total sale. |
| | | | This is very similar to a regular loan |
| Notes are merely a promise to pay a certain | | | | program called a 90/5/5 or 90% first |
| price, for a period of time, and other | | | | mortgage, 5% down payment, 5% seller second. |
| certain conditions surrounding the sale of an | | | | This is the least you should go, more |
| asset, whether a home, car, boat etc. Notes | | | | preferable is an 80/10/10 in which the first |
| are also called land contracts, deeds of | | | | mortgage is for 80%, buyer down payment of |
| trust and are considered mortgages. | | | | 10% and seller second of 10%. |
| | | | |
| Before entering into a contract, make sure | | | | Do not create a note or mortgage with the |
| that you consult an attorney for the proper | | | | intent of quickly selling it for full price, |
| language, because there are several different | | | | the more seasoned the note is, the more you |
| types on the Internet. Certain land contracts | | | | are likely to receive if you do sell at a |
| or deeds of trust slant either in the favor | | | | later date. Also note that flips are not |
| of the seller or buyer. If you are the | | | | generally a good idea either, check into this |
| seller, you certainly want one that slant in | | | | before you use notes as a means to flipping |
| your favor. | | | | houses. |
| | | | |
| Do not sell your home or sign any contracts | | | | No reasonable person enters into a seller |
| or deeds of trusts until you properly | | | | financed deal with the intention of getting |
| checkout your buyers credit. When selling on | | | | the property back or not needing a lump sum |
| land contract of deed of trust, you must | | | | of cash in the future. You must structure |
| think like a banker for resale (selling your | | | | your seller financed note or mortgage in a |
| note) purpose or to protect your own interest | | | | fashion that protects you, you assets and |
| in the sale. | | | | your ability to sell your note at a |
| | | | reasonable price, if needed. |
| Our own requirements for approving someone | | | | |
| for a land contract are 1. a minimum credit | | | | If you are a realtor, the more you know about |
| score of 625 (this was just raised due to the | | | | notes as an alternative to conventional |
| mortgage crisis) 2. Employment history 3. | | | | financing, the more homes you are likely to |
| Bank or credit union information, minimum 5% | | | | sell, especially if you dealt in the |
| down payment (Michigan) more in other states | | | | sub-prime market in the past. |