One of the old school ways home buyers used to buy homes was to secure a first mortgage and a second mortgage via seller carry financing. The program has gone away in recent years but a re-emergence is not beginning to take shape in this 2020 market. Here’s how you need to know how Sauer carry financing works
Let’s say you’re trying to purchase a house and for whatever reason, you cannot get a second mortgage, or you’re looking at a difficult jumbo mortgage. Your only other alternative is to put more cash down, get a gift, or use the option of seller carry financing. Seller carries financing can help bridge the gap between the purchase price that you need to be at to make a real estate transaction work as well as your ability to handle an affordable mortgage payment.
One such program is the 80/10/10-10% down, 10% seller carry financing and 80% new first Mortgage,
In order to get seller carry financing on most loans, you can go up to 90% financing and in some cases as much as 95% financing depending on the loan limit in the area in which you’re looking to purchase a house. Your seller carry financing can be very lucrative and it can be a good negotiating tool for helping you buy a home.
In order to be eligible, most mortgage companies are going to require the following guidelines in order for you to be eligible for obtaining seller carry financing…
- must be a market interest rate
- the term has to be for at least five years or longer
- minimum interest on the loan due
- cannot be negatively amortizing
Seller carry financing is not based on a credit score or on a debt-income ratio to get the second mortgage. Be advised the payment on the second mortgage will be a factor in your debt to income ratio for you to successfully procure the first mortgage you’re getting through a traditional lender. This might be something to consider if you’re going to be purchasing a house and you have a unique situation or you’re looking for an alternative direction to get the most bang for your buck from a borrowing standpoint.
Looking to get a creative financing package? Get a no cost purchase quote today!