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If someone online told you to stop getting your own loan and use seller financing, you need to know who does the work and who collects. If not, you pay for a course and make the calls the guru never made. But if you do, you can tell a real deal from a pitch.
This is for you if someone online told you to stop getting your own loan.
1. Three different deals. Subject-to: title changes hands, and the seller’s mortgage stays in their name at their old rate. Assumable: FHA, VA, or USDA only, and the buyer takes over the loan with lender approval. True seller financing: the seller owns it free and clear and acts as the bank.
2. The $700 question. A $400K house at 2.75% might run about $1,600 a month. At 6.5%, about $2,300. Mortgage rates crossed 6% in 2022 for the first time since 2008. Take over the old loan and you save about $9,000 a year.
3. The seller’s spread. The seller keeps paying the bank $1,600. You pay the seller $2,100. They keep $500 a month until a five-year balloon. They turned $200,000 of equity into $500 a month and a promise from a stranger, with their name still on the note.
There is no free cheese except in a mousetrap.
4. The seventeen-hour trade. The guru sells you a $149 course and tells you to cold call owners. You find a deal. “Bring it to me, I’ll close it and pay you a commission.” Sell that course 17 times: $2,533 up front, plus 17 hours a day of calls he never made.
5. Due-on-sale. Every Fannie and Freddie mortgage has one. Garn-St. Germain (1982) lists the exceptions: death, divorce, transfer into your own living trust. “I found a guy on TikTok” is not on the list.
6. A record that ended in 2022. “In 17 years it’s only been called twice.” Those years ran through falling or flat rates, when nobody calls in a loan they want to keep. Today, a 3% note is a below-market asset the servicer would be thrilled to retire. Do you want to be number three?
7. The LLC workaround. If the property sits in an LLC, you buy into the LLC instead of taking the deed. If the attorney charges $15,000 to $40,000 to structure it, that is noise on a $5M building and over 10% of a $140K house before you swing a hammer.
8. Where it pays for itself. 75/10/15: the bank carries 75%, the seller carries 10%, you bring 15%. It needs a seller who owns it free and clear and a deal big enough to carry the legal cost.
Get the attorney quote in writing.
Sources: Fannie Mae Servicing Guide D1-4.1-02 (due-on-sale exemptions); Freddie Mac PMMS, Sept. 15, 2022 (rates crossed 6%).
You don’t need a house picked out or a plan. If you’re wondering what may or may not be possible for you, email me at nlamkin@c21scheetz.com and let’s talk it through.
