Mortgage Rules for Seller-Held Second Mortgages

By
Mortgage and Lending with Finance of America Mortgage LLC NMLS# 1004324

Did you know…that sellers may provide down payment assistance to buyers and hold a second mortgage? Depending upon the amount of equity that your seller has accumulated, this could be a great option for home buyers and good long-term income for your seller.

These rules apply to both Fannie and Freddie conventional loans.

Seller Second Mortgage Guidelines

  • Loan must be at market rate of interest or higher
  • Loan cannot balloon in first five years
  • Loan must not negatively amortize
  • Loan must be legitimate and not “forgivable”
  • No prepayment penalty or restrictions
  • Buyer qualifies for first & seller-second mortgage

What does it all mean to you?

  • Buyer can have as little as 5% down
  • Eliminates PMI insurance
  • Tax advantages for your buyer
  • Lower monthly payment for your buyer
  • Income potential for your seller

The Bottom Line: You might be able to sell more houses with this little-used option! Call me for details.

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