I have seen several homes for sale in which the listing says " owner financing available" or "owner will hold note", which essentially means the owner is the bank. I have 2 questions regarding the seller and buyer:
For the buyer, can he/she still report interest paid on the mortgage when filing taxes?
For the owner, does he/she have to report the interest income received from the buyer?
Also I'm assuming this agreement is written up by the lawyers the same as if this was a bank?
Yes.
Yes.
You need to make sure of it. Get your own lawyer. With a bank involved, the paper work is pretty standard. Without that, you need to make sure all your bases are covered. Depending on local practice, this will include appraisals, inspections, title search or insurance, recording of deeds and notes...
-- Doug
To avoid future headaches, be sure the contract includes a substantial late-payment penalty.
If the buyer defaults, you want to be sure of getting the property back. So, when you see a lawyer, you should understand what happens in your area in that case. Also, find out what will happen if the buyer not only defaults but also declares bankruptcy. You need assurance you will get the entire property back even if there are other creditors. Otherwise it might not be worth the risk.
Yes.
Yes.
You need to make sure of it. Get your own lawyer. With a bank involved, the paper work is pretty standard. Without that, you need to make sure all your bases are covered. Depending on local practice, this will include appraisals, inspections, title search or insurance, recording of deeds and notes...
-- Doug
Yes.
Yes.
You need to make sure of it. Get your own lawyer. With a bank involved, the paper work is pretty standard. Without that, you need to make sure all your bases are covered. Depending on local practice, this will include appraisals, inspections, title search or insurance, recording of deeds and notes...
-- Doug
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