Seller financing

Seller financing technically called "purchase money" mortgage is a transaction in which the seller becomes the bank and finances the purchase of the property.

As with any lenders, a seller only should give a loan if there is a satisfactory cash deposit by buyer.

As with any mortgage it involves principal and interest (paid to the seller), taxes and insurance (placed in an escrow account). This is called PITI for short.

We are at present working with Loan Care, a loan servicing company under the umbrella of Fidelity National, they take care of collecting payments and late fees, if any.

Since taxes for the year are not known exactly, the escrow account is an approximation, which may have  a deficiency or a surplus, the loan care company takes care of adjusting the annual premiums and charges accordingly.

Just like with any mortgage the loan can be called and property foreclosed and repossessed in case of default by mortgagor (buyer), or the mortgagee (seller) might accept the deed "in lieu" of foreclosure.

The advantage of this is that sellers are targetting a larger segment of buyers who have less than optimal credit score and cannot qualify for institutional loans, since not many properties are offered with seller financing, sellers can capitalize by setting their price slightly above average of market and charge a higher interest.

Basically, seller sells profitably and gets to keep an income stream from the property, without any risk and with the possibility of recovering the property in case of default.