10 Questions
In a lease/option, the buyer leases the property for a period of time and may choose to buy it at a specified price during the lease term.
True
A purchase money loan is when the buyer gives a noncash asset to the seller in exchange for a reduced sales price.
False
Seller financing isn't an option for a seller who needs to be cashed out immediately.
True
If a seller offers financing with an interest rate far below market rates, the IRS will treat a portion of the principal received each year as interest.
True
A seller second may be used to supplement either a new loan from an institutional lender or an assumption of an existing loan.
True
A seller who needs some cash at closing may offer primary financing in conjunction with a supplemental institutional loan.
True
A purchase money loan involves the seller paying discount points to the lender on behalf of the buyer.
False
If the buyer pays the seller in installments over several years, part of the taxes can be deferred by the seller.
True
Seller financing can be used by a seller who needs all of their net equity immediately to buy another house.
False
A seller who needs some cash for a small downpayment on another property may choose primary financing along with supplemental institutional loan.
True
Test your knowledge on land contracts, promissory notes, forfeiture, and financing arrangements. Learn about the advantages and disadvantages of land contracts.
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