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Seller Financed Homes
There are 3 different types of seller Financing
1. Note and Deed of Trust. You will see this most often. Deed is recorded in the new Buyers name, followed by a Deed of Trust in favor of the Seller.
2. Note and Mortgage. Not used much is this State. Deed is recorded in the new Buyers name, followed by a Mortgage in favor of the Seller.
3. Agreement for Sale. The deed is held with the servicing agent until the terms of the agreement have been met.
Sellers may do these types of financing even if they have a loan, this is commonly known as a "wrap", this is a form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around and exists in addition to any superior loans already secured by the property.
The chief danger of the wrap is the "Due on Sale" clause. Most loans have a "due on sale" clause. This means if the house is sold, the entire loan balance is due. If the seller cannot pay that amount or borrow it and pay it, the lender could foreclose on the home.
Although the due on sale clause is rare and not always enforced, both Sellers and Buyers must be made aware of it.
Realtor Bill Davis has been in the Phoenix Valley for 30+ years and has been practicing real estate since 1998. During that time Bill Davis has drafted and negotiated many contracts and has extensive knowledge of the process. This experience has proven to be a great benefit and a tremendous advantage for his clients.
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