We Are Utah’s Seller Financing Experts

OWNER FINANCING IS A POWERFUL SALES METHOD

Seller Financing is an incredibly powerful solution to sell real estate that really helps property owners achieve dominant results.

Canny real estate sellers have been using this very creative method to help them sell real properties for an exceptional price, no matter the market condition, all while securing investment property income long after the property has sold and deferring their capital gains taxes.

HERE’S WHAT YOU WILL DISCOVER WITH SELLER FINANCING

  • How to establish and understand the value of your property
  • How to delay capital gains taxes
  • How to get top dollar for your property
  • How to safeguard yourself when selling your real estate
  • How to sell your real property and receive a secure income for as long as you desire

WHAT YOU NEED TO KNOW TO DO SELLER FINANCING

BASIC MATH

You do not have to be a wizard at math in order to understand the benefits of seller financing. The majority of all transactions, even in complex commercial real estate transactions, use basic simple arithmetic that anyone can easily do. 

To make it simple for you, we have broken down the top questions in regards to Seller Financing math:

  1. How much interest income will you receive above the sales price?
  2. What is the monthly payment of an interest only Seller Financed Note?
  3. How much is the monthly payment of an amortized Seller Financed note?

1. HOW MUCH INTEREST INCOME WILL YOU RECEIVE ABOVE THE SALES PRICE?

The easiest way to calculate this is to figure out how much principal is owed and multiply it by the annual interest rate. 

Example 

$100,000 Note at 5% interest = $5,000 per year of interest income.

If it is a 5-year, interest only Note, then the Seller would receive an additional $25,000 ($5,000 x 5 years).

2. WHAT IS THE MONTHLY PAYMENT OF AN INTEREST ONLY SELLER FINANCED NOTE?

Interest-only Notes are among the easiest to compute, and everyone can do the math. If payments are being made on a monthly basis, then the math is the principal amount multiplied by the interest rate, and then divided by 12, the number of months in a year.

Example

$100,000 Note at 5% interest = $5,000 per year of interest income.

$5,000 / 12 months = $416.67 monthly payment.

HOW MUCH IS THE MONTHLY PAYMENT OF AN AMORTIZED SELLER FINANCED NOTE?

Amortized Note payments will include both interest and the principal. Most popular 30-year bank mortgages are amortized loans. The payments are commonly fixed at a set monthly amount and the very last payment effectively pays off the remaining note balance.

It is best to use a calculator when determining monthly payments of an amortized loan. In the calculator above, input the principal amount in the Loan Amount, plug in the annual interest rate, and then select Month in the blue box to determine the monthly payment.

The calculator below will also tell you exactly how much interest income will be paid over the life of the Note.

INTEREST RATES

Interest rates are an important factor of the seller financing process and real estate in general. Huge macro trends will show that real estate prices and values rise when interest rates are lower. That is because most buyers of real estate will have lower payments and will be able to afford to pay more for a property. However the opposite is true, real estate prices and values are pushed lower when interest rates are high, thereby making purchases less affordable for buyers.

Interest rates are manipulated by the Federal Reserve. The beauty of seller financed Notes is that the interest rate is not set by banking policy, and is will be a negotiating point between the seller and the buyer.

Below you will find a chart of the latest interest rates that borrowers can obtain thru conventional financing. This information is helpful in order to gauge where market interest rates are at when the time comes to sell or buy. You’ll notice that different loan products and durations have different interest rates.

PROMISSORY NOTE

A Promissory Note is essentially an loan agreement or in other words a I.O.U. It is a written document that the lender and borrower signs that outlines the agreement under the terms of the loan. This includes items like these:

  • Who will be the borrower (Grantor)
  • Who is to be the lender (Grantee / Beneficiary)
  • Principal Amount
  • Interest Rate
  • Duration (How long)
  • Repayment terms

This is an essential required document that will need to be finalized prior to the property closing and sale. Do not make any additional loans or borrow any money without a written Promissory Note that is signed and agreed to by all parties. That is where things can get messy.

TRUST DEED

The Trust Deed is the instrument that is evidence of the loan and it secures the loan against real property. The Trust Deed must include certain information such as:

  • Who is the borrower (Grantor)
  • Who is the beneficiary
  • What is the legal description of the property pledged as security
  • What is the principal amount pledged in the Promissory Note

The Trust Deed will be signed and notarized by the Grantor during the closing of the property at the same time as the other closing paperwork, and will be professionally filed and recorded at the county courthouse by a title company.

Let us make you an offer to purchase or help you sell your home using owner financing!

Here are some of the things we do:

  1. Prepay six to 12 months of mortgage payments in advance – gives you piece of mind
  2. Give you a down payment – use this to satisfy your other financial requirements
  3. Purchase the property for higher and for more than what you would have receive – you will quickly see that by selling your property outright you will be making less money
  4. Stop foreclosure
  5. Short sale the property
  6. Structure a reliable monthly cash flow while you keep your home as collateral 
  7. Educate and review with you your financial benefits of seller financing.
  8.  Much, much more…. we help all people overcome debt burdens, home troubles and fears.

Remember: The Promissory Note and Trust Deed are the most important components of your Seller Financed transaction.
Want to receive these templates and examples? We’ll send you ones for free.  Contact us Today!

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