Do you have a house to sell? Perhaps you’re thinking about selling, and maybe you’re thinking about seller financing. But if you have a mortgage on your house, you might be wondering, “Can I do owner financing in Shelburne Falls Massachusetts if i have a mortgage on the property?” We get this question a lot so we decided to answer that question here… Keep reading in this blog post and we’ll answer that question and give you some strategies to move forward…
You have options
Homeowners who are thinking about selling their home in Shelburne Falls or surrounding areas of Massachusetts have several options. They can list their home through an agent, or they can list it themselves, or they can sell directly to a buyer. And, many homeowners are discovering a simple strategy called “owner financing” or “seller financing” that allows them to sell their home to a buyer and collect regular payments that pay off the house:
- The buyer pays a down payment
- The buyer pays regular monthly mortgage payments to you
- You are protected with a mortgage lien on the property
Homeowners love it because it’s a great way to sell and a great way to find even more buyers – including those who might not be able to get traditional bank financing. Home buyers love it because it means more choices for them and they don’t have to necessarily impact their credit score to get a house.
If you own your house outright, you can do a seller financing agreement. But what happens if you have a mortgage? Maybe you’re wondering, “Can I do owner financing in Shelburne Falls and other areas of Massachusetts if I have a mortgage on the property?”
The short answer is: it’s complicated.
Seller financing with a mortgage
In Massachusetts, you can create something called a “wraparound mortgage” in which you extend a mortgage to a buyer (usually at a higher rate of interest) while still paying your own mortgage to the bank.
You also could sell your Shelburne Falls home to someone “Subject to” the existing loan. The buyer takes over your mortgage, makes the monthly mortgage payment directly to the lender or through a third party trustee and then also pays you a monthly mortgage payment on a second mortgage that you take back. You then earn interest on the second mortgage.
Can I Do Owner Financing if I Have a Mortgage on the Property? – You have choices
If you’re unable to or don’t want to sell your Shelburne Falls, MA home with seller financing because of an existing mortgage, you have other options…
An alternative that might work for you is called rent-to-own, which has some similarities (such as ongoing payment and you own the house) and some differences (there might not be a down-payment and the buyer needs to qualify for a mortgage from a bank at the end of the pre-established rental term). At Tom Buys Houses, we also consider buying homes and rental property on a rent-to-own (lease/purchase) basis whereby we would rent your home with an option to purchase it in two or three years. We then turn around and find a tenant-buyer to rent-to-own the property from us.
If you are thinking about accepting owner financing in Shelburne Falls MA but you still have a mortgage on your property, here’s another option for you: Get in touch with us and talk to us about your property. As experts in buying and selling real estate, we are aware of a number of options that you might not know about. We can walk you through those options and help you out ourselves or we can connect you with someone who can help you.