How can I hold a mortgage for a buyer on a house I own outright?

It's actually pretty straight forward and can be a very profitable real estate investment.

I would recommend hiring a real estate attorney to draw up the contract and the note for you. You want to pay special attention to any tax implications, as well as how the contract addresses default.

There are multiple ways the transaction can be done. You can do a straight purchase with you "carrying the note". You can sell on contract - also commonly called contract for deed.

There are differences between states as far as what you can legally do, what has to be filed, foreclosure proceedures, etc. It's well worth the few hundred dollars a RE attorney should charge you to handle the transaction.

Some thoughts from a person who has sold many homes and held the mortgage.

1. get a large down payment,
2. don't loan the money to someone that the bank would not loan unless you get a larger down payment
3. expect to have to foreclose and know the laws and how before you even let them have the loan.
4. assume when you do the loan, that you will get the house back with rugs ruined, holes in the walls and no working heat and air with perhaps all the fridge and stove missing.

** That has happened a lot more than once to me, and read here and you will see how often things like that happpen.

Often times you will find that a title company is able to draw up the proper paperwork for you. One thing that you will need to do is to execute a purchase agreement or "contract" on the house. Here is the order that I would go about this.

1. qualify the buyer just like the bank would do
2. execute a purchase agreement
3. have the paperwork for the "loan" drawn up by a title company

Personally, I would hire an agent and have them fil out the contract for you and the purchaser so that everything is used on a state form. More homes are bought and sold with the forms that the agent uses than any other forms that you will find on the internet. Sure you could hire an attorney, but the attorney is an expert at the contract and not at the actual sales process and meeting the contingencies and deadlines that must be met and negotiated between a buyer and seller.