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    cotugno2262's Avatar
    cotugno2262 Posts: 1, Reputation: 1
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    #1

    Dec 4, 2013, 08:18 PM
    Owners holding mortgage
    I am an owner of a property valued at 200,000. How would it benefit me and how would it benefit a potential buyer if I held the mortgage. The property is paid for,
    ma0641's Avatar
    ma0641 Posts: 15,681, Reputation: 1012
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    #2

    Dec 4, 2013, 09:52 PM
    You get the benefit of getting a consistent cash flow and still own the house if they default. Their benefit is little up front cost, little or no closing costs and building equity. You may have to look at your age and term of loan. Make sure will identifies what will happen with house once you pass on./
    ScottGem's Avatar
    ScottGem Posts: 64,970, Reputation: 6056
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    #3

    Dec 5, 2013, 05:39 AM
    It depends. Generally an owner will hold the mortgage to make a sale when the buyer has problems qualifying for a mortgage. So the advantage to the owner is making sure the sale goes through. The advantage to the buyer is making the purchase when they may not qualify.

    But the owner may be taking a big risk if the buyer does not qualify for credit on their own. Also a mortgage is a loan secured by the property. With a mortgage ownership of the property is transferred so to regain the property in case of default you would have to go through the foreclosure process.

    A better option is a contract for sale. In a contract for sale, the seller maintains ownership and the contract specifies what happens in case of default.

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