Explore the Mortgage101 Library
Check Local Mortgage Rates
Loan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
Carryback loans are a unique financing tool used to purchase property. They are very commonly used in commercial real estate. Sometimes, though, carryback loans should be avoided. Here are three reasons why:
1. Ulterior Motives
If someone is offering you seller financing, there is usually a reason behind it. Most of the time, a seller that offers financing is selling a property that no one wants. If the property you are looking at is being offered as part of a carryback loan, you need to ask yourself why it would be offered this way. Take a good look at the property and make sure nothing is wrong. Be certain you want to live there before you decide to purchase.
Many times they have to offer seller financing because the property is overpriced. Just because the property is being offered as part of a seller financing package does not mean that you should take it. Buy property based on the value of the property itself, not the financing attached to it.
If the seller still has their name on the loan, you have to rely on them to a certain extent. If you are making your payments to them each month and they don't pay the bank, you might lose your asset.
- What Lenders Don't Reveal About Home Equity Loans
- 3 Factors that Can Negatively Affect Your Mortgage Application
- What To Do When Mortgages Default
- Second Mortgages: Advantages and Disadvantages
- Alternatives to Getting a 2nd Mortgage
- Appraisal Basics
- 3 Common Short Sale Mistakes
- Home Equity Loans for People with Bad Credit
- Should You Refinance? Make Sure the Timing is Right