A carry-back loan is the the part of a home loan the seller is willing to finance. The seller carries a deed against the property and takes a promissory document from the buyer for the amount due on the mortgage. This method of financing is generally used when the buyer isn’t able to secure a traditional mortgage. This type of loan has advantages for both the seller and the buyer. The seller is able to secure a buyer for a property that may have some undesirable issues that make it harder to sell. The property continues to generate income for the seller and usually home repairs become the responsibility of the buyer. Generally, the buyer benefits from a lower interest rate and there are no closing costs. Over time, the buyer also has the opportunity to improve their credit and enter into a conventional home loan.
