I'm sorry for the slow posting these days; we're in the middle of a move here, and my house is on the market.
I just had a potential buyer who was looking for a 20% seller carryback option.
As I understand it, if you need a seller carryback, this is your situation:
•You have no money to put down on the purchase of the home.
•Your credit score is too low (<550) to get a zero-down mortgage loan.
•The conventional lender will only loan you the money for the home if you have a down payment (in this case, 20%)
So in a carryback mortgage, the seller would carry a second mortgage for the buyer. The bank looks at that as a down payment, and loans the buyer the rest of the money.
I can't figure out the advantage for the seller. Why would I want to carry such a high-risk loan for tens of thousands of dollars? At 20%, I'd be risking all of the equity in my home on a borrower who couldn't qualify for a better mortgage. What am I missing?