Seller carryback mortgage ripe with benefits

DEAR BOB: What is a seller carryback mortgage, which you often mention? --Mary J.

DEAR MARY: When you buy a property and the seller finances all or part of your purchase price, acting like a mortgage lender, that is called a seller carryback mortgage.

Purchase Bob Bruss reports online.

Sellers often carry back mortgages to facilitate the sale, earn interest income on the unpaid balance, and create a safe investment secured by a mortgage or deed of trust on the property they just sold.

Many retirees especially enjoy carrying back mortgages for their buyers because the retiree then has safe retirement income at a higher interest rate than usually can be earned elsewhere.

In today's home sales market, for example, if you buy a free-and-clear house with a 10 percent cash down payment, the seller could then carry back a 90 percent first mortgage. If you offer the seller a 6 percent interest rate, that's a "good deal" for both you and the seller.

Should you default, the seller can then foreclose and either get paid in full by a bidder at the foreclosure sale or, if there are no bidders, get the property back to sell for a second profit.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

Copyright 2006 Inman News