As an alternative to a conventional lending institution, a purchaser may find a seller who is willing to "finance" the transaction. Under these arrangements, a seller receives a promissory note from the purchaser and uses a mortgage, deed of trust, or similar instrument to secure payment and guarantee performance.
Other financing options, such as the use of a Real Estate Contract, assumption of the seller's mortgage, graduated payment plans, and adjustable rate loans may also be worth investigating.
Specific terms and requirements for loans vary widely and are influenced by "money market" conditions, the quality of the borrower's credit, income sources or assets, and other factors. Loan costs can also vary, and may include service charges, appraisal fees, survey costs, title insurance, escrow and legal fees.
If financing is required to complete a transaction, a purchaser should be sure the Purchase and Sale Agreement specifies that requirement as a condition of the purchase. Furthermore, the purchaser usually has the responsibility for finding a financing commitment by a certain date if that is a condition of the purchase.
The agreements used to secure a debt with real property are usually lengthy and complex. Such agreements affect the payment of money to a seller, a lender, or both, and establish a security interest in your real property or home. Even with a "standardized" form, legal and/or tax advice may be necessary to fully understand the details, obligations and legal consequences of the documents.