Seller Financing FAQ's For Buyers
1. How much down payment is required
20% down is typical however a lower down payment may be possible on a case-by-case basis. If the property needs some repairs you may be able to trade a lower down payment for completing some of the repairs yourself.
2. Do I need good credit?
Perfect credit is not needed. Your income and down payment are more important than your credit score.
3. How much will my payment be?
For most properties, the monthly payment will be comparable to market rent.
4. What are the requirements?
Although bank financing and scrutiny is not a factor, we do screen all buyers for ability to make the monthly payments. This is done by a licensed Residential Mortgage Loan Officer (RMLO). We use Texas Pride Lending as the RMLO. They will collect employment and credit information to verify you can afford the payments. Click here for a summary of the Texas Pride Lending checklist.
5. Where do we close?
Closings take place at a title company or real estate attorney's office. If title insurance is not being purchased, the closing will most likely be at an attorney's office.
6. When do we close?
The closing can't be scheduled until the RMLO gives the clearance to close. There are some rules about waiting periods after loan disclosures are signed. So don't plan a closing date until the RMLO provides an earliest closing date.
7. What will my closing costs be?
These are typical closing costs. In some cases, they can be rolled into you loan to lower your cash needed to close.
* Escrow prepaid taxes (3 months is typical)
* Escrow prepaid insurance ( 3 months is typical)
* Homeowner's insurance policy
* Title insurance policy (optional).
* Appraisal (optional)
* New survey (optional)
* HOA transfer fee
* Recording fees
* Flood Certification fee
* RMLO service from Texas Pride Lending
* Closing Disclosure from Texas Pride Lending (if required)
* Attorney document preparation fees (mortgage note, deed of trust)
* Title company/attorney office processing fee, 50% is paid by buyer & seller
* Note servicing set up fee
* Lender points: 1-2 points (1 at closing, 1 at end of the loan)
* Down payment funds, 20% is typical
Note 1: The RMLO will provide a worst case scenario closing cost figure. Depending on the purchase/sale agreement, the closing disclosure may reflect higher than actual cash required to close.
Note 2: The RMLO will collect an initial fee from the buyer to get started. Usually around $300. The balance of the RMLO fee can be paid at closing.
8. Do I have to escrow taxes and insurance?
The short answer is yes, it is required. The loan servicing company will collect escrow payments. The loan servicing fee is typically $25/month.
9. Who do I make my payments to?
Payments will be made to a loan servicing company. There is a separate monthly fee for the servicer that is added to the monthly payment (usually around $25). There is also a one-time set up fee. Payments will be set up to auto draft from your bank account.
10. What documents will I get at closing?
You will get a copy of the Deed of Trust, mortgage note, closing disclosure, loan amortization table, loan disclosures and other pertinent documents. The Deed of Trust will get recorded at the county clerk's office.
