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13. Seller Financing M/C

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Questions and Answers

Which type of seller financing involves the buyer giving the seller a deed of trust?

Purchase money loan
Land contract (correct)
Wraparound loan
Assumption

What is NOT a reason for a seller to use seller financing?

It may allow the seller to charge a higher price for the house in exchange for other benefits
It provides tax benefits
It can help attract a buyer at times when interest rates are very high
It provides a seller who needs to be cashed out with a large lump sum (correct)

What significant tax benefit can seller financing provide for a seller?

Recapture
An installment sale (correct)
Depreciation
Casualty loss

A seller second is used to supplement which type of loan?

Either B or C (B) Signup and view all the answers

When might a seller be affected by the IRS's imputed interest rule?

Seller second uses an interest rate that is too far below market rates (A) Signup and view all the answers

In a land contract, what is the seller also known as?

Vendor (A) Signup and view all the answers

What is one factor a buyer should consider when contemplating a seller second financing option?

The seller's cash flow and yield (B) Signup and view all the answers

What aspect should a seller think about when considering a seller second financing?

Possible negative tax consequences (B) Signup and view all the answers

How long may a second loan's balloon payment be required to be after closing to meet a conventional loan requirement?

Not less than five years (A) Signup and view all the answers

What could be a possible consequence of the imputed interest rule for a seller considering a seller second financing?

Negative tax consequences (B) Signup and view all the answers