Navigating St. Louis Seller Financing
As a St. Louis seller, dealing with a lender can be a nightmare. You have to go through a middleman to get anything done, and you end up paying large fees to do what you could probably do on your own. If you want to cut out the middleman when selling your St. Louis home, you should consider seller financing.
Here is our guide on how to navigate St. Louis seller financing.
Defining St. Louis Seller Financing
When you are a St. Louis seller financing your home, then you’re basically both the bank and the seller. In most instances, you and the buyer get separate mortgages to finance your own homes. With seller financing, the buyer makes payments to you instead of the bank. Essentially, your owner is your renter first.
This is a great option if you have an investment property you want to get rid of. You’ll still take in your rent money, usually about the same amount, but now you won’t be dealing with the other fees such as homeowner’s association fees as well as property tax. You just handle the mortgage payments, which are covered through rent.
What This Means
So how does this idea work? How can you ensure that your buyer will continue to make payments to you?
Like with a regular loan, your buyer will sign a promissory note to you. This note will outline the payment schedule and list the interest rate. It will also cover consequences for late payments and what happens if the buyer defaults on the loan.
Of course, you probably don’t want to be taking these payments for the next 30 years like a traditional loan, so these deals are usually short term. After five years, your buyer may pay off the rest of the amount remaining, and the home will officially be theres.
Pros and Cons for St. Louis Buyers
For St. Louis buyers, this type of deal has some pros and cons, including:
- You can get a home without a mortgage, which means no jumping through lender hoops
- You won’t have to wait through a long closing period
- You and the seller can negotiate things like payment schedules and down payments
- Interest payments, however, may be higher
- Your seller will still run a credit check and could turn you down
- You have to have the funds to pay the total sum at the completion of your loan period
Pros and Cons for St. Louis Sellers
Sellers too can turn this into a good deal, with pros and cons such as:
- You don’t have to go through a traditional sale
- You don’t alway have to make repairs
- Your interest rate might be better than with some other investments you have
- If the buyer defaults, you can keep the interest, the house and the down payment
- But if you still owe a mortgage, you usually can’t do this
- If the buyer does default and stays on the property, then you have to foreclose on it, which is a big hassle
If you decide to go through with St. Louis seller financing, make sure you have a good real estate attorney to help you draft the paperwork and make sure everything is in order.