Posted by Michael Morrongiello on March 08, 2000 at 12:05:58:
When you wish to seller finance a home to a buyer if you intend on holding on to the note then you pretty much make your own judgement calls when it comes to getting comfortable with a buyer. Payors with sloppy or blemished credit backgrounds can become much more acceptable to a note funder as tiime goes on and they establish a conclusive payment history on the seller financed loan. The cliche “Time heals all wounds…” is applicable even with a persons poor credit background. After 3-6 months or more of payment history on a note, even payors with low credit scores become more acceptable.
IF however you are looking to sell a property and owner finance the sale and then also wish to right away SELL that paper either at closing or shortly thereafter then some more attention to how these payors “size up” must be paid. There are some great advantages in using seller financing that differ from other financing methods and allow you greater control over the sale and financing process:
Typically there are no income to debt ratio requiements
Credit scores themselves are NOT the only criteria to making a deal happen. There is a willingness to look beyond the credit score at the overall credit report and other off setting positive issues like long term employment stability, etc.
The documentaton requirements are much more relaxed and streamlined. There are NO requirements for VOD’s, VOR’s, or VOE’s
A simple credit application, some recent paystubs, maybe some W-2’s, and thats it.
The way to make sure a deal will happen is to “preflight” the transaction with an experienced note funder.
Best of luck