Definition of Seller Carry-Back:
Orange County Seller Carry-Back Financing:
When the Orange County real estate market is slow, home sellers often have to a little more creative to sell their homes and sometimes they will use owner financing to speed up the sale of their home. Using a strategy called a seller carry-back note can provide additional financing for a buyer and helps sell an Orange County property faster. With a seller carry-back arrangement, the seller of a house takes back a portion of the debt on the house and allows the buyer to make payments for that debt over time. For example, the buyer might take out a traditional mortgage for 80 percent of the purchase price, make a down payment of 10 percent and then the seller offers a 10 percent mortgage for the remainder of the purchase price.
It is important to note that under this scenario that the lender who is making the first mortgage will take a very close look at this seller carry-back; they are concerned about both the LTV on the property AND the CLTV (the combined loan-to-value) on the property. In the above example the CLTV is 90%, even though the first mortgage on the property is 80% which does not require PMI the lender may decline the first mortgage or require a higher interest rate because of this seller carry-back.