Third (3rd) Party Financing Addendum – If the buyer is going to be obtaining a loan through a bank or government insured source (e.g., FHA, VA, etc.).
Types of Seller Financing (4)
- Fixed Rate: An amortized loan with an interest rate that doesn’t change for the term of the loan, commonly for 20 to 30 years.
- Balloon Mortgage: Type of loan that is commonly amortized for a longer period but the remaining balance is due within 5 to 10 years.
- Interest Only: Buyer only makes payments on the interest accruing with the principal balance due on a later date.
- Adjustable Rate Mortgage: The buyer pays the interest rate that is updated periodically based on the SOFR (Secured Overnight Financing Rate) provided by the Federal Reserve.
Attaching to Purchase Agreement
Once complete, this addendum should be signed and attached to the purchase agreement made between the parties.