Seller held 2nd

If you do not qualify for 100% financing through a lender, you could obtain a seller held 2nd. In this scenario, the seller would actually provide the 2nd mortgage. This is a good possibility if the seller has significant equity in the property.

Seller seconds, also known as seller carry-back mortgages are very useful for borrowers whose credit may not be quite good enough to qualify them for the loan that they need. A common type of seller second would be if the borrower was to obtain an 80% first mortgage and then they may not qualify for a 2nd mortgage with a traditional lender so the seller offers them some creative financing and keeps a 20% second mortgage. Usually the borrower will have to refinance out of this within a year or a couple of years. Contact your local mortgage professional for more information about this type of financing.

Most times the seller held 2nd mortgage is as little as 5% of the sales price.

When getting a seller second the first mortgage lender may want to see a copy of the agreement between the two parties. This agreement may have to be approved by the lender.

A seller held second proposal works best in a situation where the seller plans to invest the proceeds of their sale. The second mortgage represents an instant investment for the seller that earns them an attractive rate of return. If the seller decides they no longer want to hold the note, it can usually be sold on the open market although the seller will probably have to discount it in order to sell it.