Finding enough cash to make a solid down payment on the home of your dreams is often a difficult task. With home prices at all time highs, coming up with 10 or 20 percent equates to a large amount of money. Well, the seller might just help you if you ask.

Ask The Home Seller For Help With Your Financing

As you know, we have just finished up one of the hottest real estate markets every recorded. With massive appreciation rates and incredibly low interest rates on loans, it was a seller market through and through. Alas, those heady days are now over and done with. For many a buyer, this presents some interesting financing options.

During the sellers market, homes were being snatched by buyers before they were even appearing in the MLS listings. Sellers could sit back and come up with an outrageous price and the offers would practically flood through the door. Any buyer that didn’t show up with financing arranged was laughed out the door. The seller had all the leverage, so why mess about?

With the current market, sellers know longer have the leverage. Now, they are having problems getting interest in their homes, much less offers. The market is flooded with too many homes. On top of this, interest rates have risen which reduces the potential pool of buyers. In simple terms, the tide has turned. A seller that might have laughed one year ago if you asked them to help with financing will probably be listening closely this year.

What is seller financing? It is simply a situation where the seller agrees to take part of the purchase price as a second mortgage on the property. Let’s say you want to buy a home for $300,000. You have 10 percent or $30,000 for the deposit. The lender, however, will only loan you 80 percent of the value of the home. You need to come up with another 10 percent. In such a situation, the seller will agree to finance you by taking a second on the home for the 10 percent. The repayment terms are up to negotiation, but this is how it happens in a nutshell.

At one point in time, seller financing was views as a fairly aggressive, rare form of financing. These days, it is very common given the high prices of homes on the market. If you are short on the deposit, make sure to address the issue with the seller of the home.

Dan Lewis is with Great Western Mortgage - mortgage brokers providing home loans.