Should You Consider Seller Financing For Your Oklahoma City Home?
It’s a unique position to be in, but if you’re fortunate enough to be able to finance the sale of your own Oklahoma City home, there are some important things to keep in mind. First, as yourself: is seller financing right for me? It really depends on your financial situation, but if you own your home free-and-clear, providing the financing to a buyer can certainly have its advantages.
Of course, it’s paramount that you protect yourself, so here are some things to keep in mind if you’re considering this unique real estate transaction.
- Duration of Loan: Seller-financed loans are often short-term. Normally, they’re amortized over 30 years but have a balloon payment due in five years. The ide being that within a few years, the home will have gained enough in value or the buyers’ financial situation will have improved enough that they can refinance with a traditional lender.
- Due Diligence: Like a traditional lender, you need to do your research on the buyer. Have an attorney prepare the promissory note and mortgage for you and have the closing company issue title insurance on your new loan. Also, don’t skip having your buyers fill-out a detailed loan application. You should thoroughly verify everything, including running a credit check, verifying their employment, and looking at their assets, references, and so forth.
- Secure the Loan with your Home: Structure the loan in such a way that it is secured by the property. This will give you the leeway as the seller/lender to foreclose on the property if the buyer defaults.
- Require a Down Payment: Institutional lenders ask for down payments, and so should you. They’re a cushion against the risk of losing the investment, and they also make it harder for your buyer to walk away from the deal. As a good rule of thumb, collect at least 10% of the purchase price as a down payment.
Please let us know if you’d like to find out more about Oklahoma City homes for sale. We’d love to help you navigate the Oklahoma City housing market as you familiarize yourself and search for the home of your dreams.