"Seller May Carry" or owner interim financing detached homes and condos are available in the Phoenix metro area including Scottsdale, Paradise Valley and Fountain Hills Arizona. To see pirces, locations and details for "Seller May Carry" homes for sale in the Phoenix Metro
What is Seller Carry or Owner Financing?
For those buyers that are not yet ready to finance with a new Conventional or FHA mortgage, "Seller May Carry" interim financing of 3-5 years is a viable alternative. This allows buyers to buy now while wating for their credit to improve. Sellers typically expect 20-30% down payment to accomodate the risk for those buyers that have some cash but a low credit score and cannot obtain a new mortgage right now. Sellers that have the home on sale for Cash or FHA or Conventional Loan may also offer "Seller May Carry" financing. This owner typically owns the home 'free and clear'. There is no hard and fast rule about what specific seller carry terms the seller may accept. A buyer's Realtor can find out for you.
Benefits for Buyers
For those buyers that see prices on the rise, a "Seller May Carry" home in the Phoenix metro or Scottsdale, Paradise Valey or other suburban city may be something to consider. This owner financing allows a buyer to purchase a home now while they are waiting to qualify for a conventional mortgage and get their credit squared away. True, the home's price may be higher with the Seller having to wait for payment, rather than selling for cash or to another buyer with a conventional mortgage, but the ability to purchase a home now can be accomplished. Do not expect the Seller to discount the price. They could discount the price to attract a cash buyer or a buyer with a mortgage loan and be paid for their home immediately.
After the interim financing period is over with the seller a buyer with a job and good income may be able to qualify for a mortgage if they are waiting out the time period required after a short sale or foreclosure (3-5 years). This "Seller Carry" interim financing serves as a bridge. There is typically a balloon payment due for the balance of the loan at the end of the interim financing period. At that time the buyer would have to refinance the home with their own loan to pay off the interim seller financing loan.
After the interim financing period is over with the seller a buyer with a job and good income may be able to qualify for a mortgage if they are waiting out the time period required after a short sale or foreclosure (3-5 years). This "Seller Carry" interim financing serves as a bridge. There is typically a balloon payment due for the balance of the loan at the end of the interim financing period. At that time the buyer would have to refinance the home with their own loan to pay off the interim seller financing loan.
Buyer Considerations and Risk
1. Buyer needs cash for down payment, typically 20 to 30%. Sometime 15% may possibly be enough. The seller needs to cover their Realtor commissions and closing costs (including owner's title insurance) and still wants to put something in their pocket if they are turning over the deed of their home to a buyer.
2. Buyer needs to be confident that they will qualify for a new mortgage after the interim financing period expires
3. Down payment is at risk if buyer cannot qualify for a new mortgage (loses job, credit score does not improve etc)
4. Realize that buyer may not be getting a "bargain" price for the home if seller is carrying the mortgage. Seller if offering a discounted bargain price would sell for cash or to a buyer with a mortgage where they can "cash out"
5. A buyer cannot expect the seller to accept the transaction just because they have the cash down payment. The seller will still ask for a credit application and will review. However, a seller is likely to be less stringent in loan qualification than a mortgage lender will be.
Learn more at Seller Carry Financing Homes in Arizona
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