Title: Holding a Mortgage Note: Benefits and Drawbacks | Women Who Money
Headings: Holding a Mortgage Note: Benefits and Drawbacks
Holding a Mortgage Note: Benefits and Drawbacks
What Does Holding a Mortgage Note Mean?
How Does Owner Financing Work?
The note includes information such as:
A private mortgage is also generally written securing the property as collateral for the loan.
Benefits for Sellers Who Hold the Mortgage Note for the Buyer
1. Monthly Income
2. Larger Pool of Buyers
3. Higher Profit on Sale
4. Rights to Property in Case of Non-Payment
Benefits of Seller-Financing for Buyers
1. Less Hassle/Time Required
2. May Avoid PMI
3. Costs Negotiable
Drawbacks for Sellers Holding a Mortgage
Drawbacks of Owner-Financing for Buyers
Ways Seller’s can Protect Themselves
Is Holding a Mortgage a Good Way To Make Money?
By Women Who Money Co-Founders, Vicki Cook and Amy Blacklock

Content: Lending practices have also affected some sellers’ ability to offer financing on real estate in the last decade. The financial crisis of 2007-2008 led to the passage of the Dodd-Frank Act of 2010. This legislation exists to help protect consumers from predatory lending practices. It would likely not impact a seller holding a note for one property, but if you plan to offer seller financing on your home or land, discuss this with your attorney and real estate agent. Drawbacks of Owner-Financing for Buyers
A buyer may put down a smaller down payment and close quickly on their new home with seller financing. But they may pay more in the long run if the loan comes with a higher interest rate than a bank offers. Buyers also have to consider how they’ll pay off the balloon payment if one is part of the terms of the financing agreement. Buyers will either need to come up with the funds or seek approval for a bank mortgage. They can’t assume the seller will re-negotiate a new loan with them, even if they have been prompt with payments over the years. Ways Seller’s can Protect Themselves
As mentioned before, the legal paperwork required for seller financing should be drafted or at least reviewed by an attorney or qualified professional familiar with the process.