I purchased a home recently in Upstate New York. The house is in good shape, insured. I touched it up and put it up for sale, everything works. My agent found a buyer who wants to purchase the house if I hold the mortgage. 10 pct down. Monthly payments, with a balloon payment (the balance due plus 8pct) in 4 years is the proposal.

The buyer has good references, I have no reason today to believe he will abandon or leave the agreement on bad terms and not pay the balance after 4 years.

However holding a mortgage is a loan. To hold a mortgage means I am loaning someone money to purchase the property. The disadvantage is the risk of defaulting. The advantage is only that I can sell it to someone who may not have enough down payment.

I could write it into the contract that they have to maintain insurance. I could also write it in that the buyer would have to send tax and insurance payments along with their monthly payments and I will pay the taxes and insurance.

But I can't help but keep wondering if I want to service a loan like this. Doesn't make a lot of sense.

So my question is this, does it make any sense for an individual to hold a mortagage?

Balloon mortgages are always risky. But not for the holder of the mortgage. Are we talking a lot of money or a small amount of money in 4 years?

It makes dollars and cents.
You are the bank and you will collect all the profit. 8% is a pretty good profit.
If you're concerned, insist they obtain mortgage insurance that would pay you if they default. You should require them to maintain standard homeowner's insurance.
A good friend has made a very comfortable living doing just this.

If you don't feel comfortable, just turn down the offer and keep it on the market. And have a sit-down with your agent...

Why or what makes you think that in 3 years and 6 months they can get a loan when they can't now.

Also lets say you get a notice that their insurance was canceled last week but sadly yesterday the house burnt down, not covered

Lets say that things go wrong, and you find your home ( they way my son found his yesterday) the perosn in it, took the fringe and stove, the floors were ruined, and they even cut the main breaker box and stole it.

You say they have good references. One thing you might consider here is writing into the contract that you can sell the mortgage. Then sell it to another lender. That gets you out of servicing it and you still get some cash.