There are no universal requirements mandated for seller financing. In order to protect both the buyer's and seller's interests, a legally-binding Purchase Agreement should be drawn up with the assistance of an attorney and then signed by both parties.
Seller/Buyer benefits
- Both the buyer and the seller can make substantial savings in closing costs.
- They can negotiate interest rate, repayment schedule, and other conditions of the loan.
- The buyer can request special conditions for the purchase, such as inclusion of household appliances.
- The borrower does not have to qualify with a loan underwriter.
- There are no PMI insurance premiums unless negotiated.
- The seller can receive a higher yield on his/her investment by receiving equity with interest.
- The seller could negotiate a higher interest rate.
- The seller could negotiate a higher selling price.
- The property could be sold "as is" so there will be no need for repairs.
- The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid.
