Orange County Register: Home sellers have the option to finance their low-rate mortgage and earn additional income

Home Sellers Can Finance Their Low-Rate Mortgage and Generate Income

Title: Home Sellers Can Finance Their Low-Rate Mortgage and Generate Income

In a time where the real estate market is booming but inventory is low, home sellers are finding creative ways to capitalize on their low-interest rate mortgages and earn additional income. One such method gaining popularity is the use of wraparound mortgages, also known as all-inclusive trust deeds.

With interest rates at historic lows, many homeowners have secured mortgages at rates as low as 2.5%. By selling their homes and offering a wraparound mortgage to buyers at a higher interest rate, sellers can generate additional income while still providing a competitive financing option for buyers.

For example, a seller with a $600,000 mortgage at 2.5% could sell their home for $750,000 and offer a wraparound mortgage to the buyer at 5.5%. This would result in the seller earning an additional $1,500 per month, or $18,000 per year, on top of their home sale profit.

While wraparound mortgages can be a lucrative option for sellers, it is important to proceed with caution. Working with an experienced real estate attorney to create the agreement is crucial, as there are risks involved if the buyer defaults or if the underlying mortgage servicer calls the note due.

Despite the potential risks, wraparound mortgages offer a unique opportunity for home sellers to leverage their low-interest rate mortgages and earn additional income in a competitive real estate market. With the help of legal and financial professionals, sellers can navigate the process and potentially benefit from this creative financing option.

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