The two previous posts discussed what some might call "creative financing". In these tough economic times, people are finding unique (or little known) ways to enable the sale or purchase of a home. These non-traditional transactions help 1) buyers who might not normally qualify, 2) sellers who are having difficulty selling and 3) stimulate the local real estate market. No matter what your financial situation is, a licensed, professional mortgage broker is a valuable resource who can help you determine the best type of loan for your situation.

Basically, and simply put, seller carry back financing is owner-provided financing. This can be a win/win for both the buyer and the seller. The increasing interest of this type of financing is due to the difficulty some are having when applying for a traditional loan.

The seller offers to “carry back” the loan to enable the buyer to purchase the house directly from the seller. Both sign a promissory note that states the buyer will pay a designated amount, plus interest, on a scheduled monthly basis. The only difference between this and a traditional loan is that the seller receives the payments instead of a bank.

Just like a traditional loan, title is transferred and the buyer takes possession of the property. If the buyer does not continue making payments, the seller can legally foreclose and take back the property. At that point, he or she can sell it, this time with a traditional mortgage, or seller carry back again.

Some seller-financed transactions might be disallowed due to the SAFE Act, which was passed in 2008. This applies even when originating all loans - even seller carry-backs on your own home. An exception is when the homeowner sells to immediate family members. Sellers may also carry back, only every three years, on their own house to a non family member.

I participated in the small think tank group that helped develop and write the state test that was implemented two years ago to meet the requirements of the SAFE Act. Briefly, it serves as protection for the buyers, requiring that anyone originating a loan be licensed by the state. Who better to assist you, than a mortgage broker who knows this law from the ground up?