Mortgage Buyer Tip on Balloon Payments

2009 November 6

When offering seller financing to sell a home, don’t set the balloon too short. I would set the balloon period at least 5 years out and preferably 7 years out. Mortgage buyers are wary of balloons due real soon. They see it as an almost sure fire foreclosure since the odds of the buyer qualifying for a traditional mortgage in order to refinance and pay off the private mortgage note are poor.

So be careful when you set the terms when owner financing. It could make a significant difference in the price you get if you need to sell a private mortgage to a mortgage buyer.

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