There are MANY scenarios where mortgage lenders are unable to help families and investors purchase a home ~ even with reasonable (or significant) assets and income sources. Although seller financing may be more expensive than a mortgage, the benefits may outweigh the costs – depending on your circumstances and timeline.
Rates – a bit more than mortgage rates
With A-Good-Deed, a contract for deed buyers rates are determined at the time we obtain our 5 year financing when we purchase the property. The initial rate moves (sometimes weekly) based on economic conditions and can be impacted by location, condition of the property and any other risk factors we see, but will be fixed for the 5 year contract (and amortized up to 25 years). There will be a balloon balance at the end of 5 years unless unscheduled principal payments are made before then.
Stipulated Shared Appreciation Fee (SSAF)
The SSAF is a predetermined amount we receive representing profit that is based on our risk and time involved in the property through when you payoff the contract for deed. The amount is negotiated and determined prior to entering into the purchase agreement.
Closing costs
As with any large purchase, there are closing costs (third party expenses). These costs are either paid by the current property owner or paid by the buyer at closing. Due to there being TWO closings and THREE sets of costs, plan on 3% for the transaction costs:
- Acquisition of the property from the current owner (bank, title, appraisal, etc)
- Sale of the property to the contract for deed buyer (title and recording costs)
- Upon payoff, there are liquidation costs (deed tax and recording costs)
