Seller Financing in a Real Estate sale in Puerto Vallarta
If you have been considering buying Real Estate in Puerto Vallarta, you probably have looked at financing options in Mexico only to find out that there are not many cross-border loan options for you however, if you have some of the funds already available Seller Financing can be option for you.
While most of the Real Estate Sales in Puerto Vallarta are cash, very few sales take place with Seller Financing. So I thought I’d write about this and give some insight about how to approach the Seller Financing option when Buying Real Estate in Puerto Vallarta.
The first thing to consider is that sellers do not have the capabilities of a bank and for them, the buyer defaulting on the loan represents a high risk. The only scenario in which they would be willing to offer Seller Financing is if there is a potential buyer interested in their property that has most of the cash, but needs just a little bit of time to come up with the rest of the funds to buy it. As a result, sellers expect a larger down payment, such as 50% or more.
For this same reason, most sellers would prefer carrying the loan for maybe one or two years only. Interest rate can be negotiable. I have seen sales closed with seller financing with annual interest rates between 5.5% and 7%, but can be higher depending on the seller. This is one of the reasons why seller financing would be attractive for a potential buyer. Currently, foreign financing options for U.S or Canadian nationals not permanently living in Mexico have higher interest rates – as much as 16% annually.
Guaranteeing the Loan
There are a couple of options to guarantee the loan. One can be a mortgage on the property in favor of the seller where the property is used as collateral. Another can be a Guarantee Trust through the trust bank.
If you have been thinking about seller financing as an option for your Real Estate Purchase in Puerto Vallarta and would like to know more about these options, please contact me at email@example.com give me a call today at 322-146-6296 or visit www.puertovallartarealestateagent.com to see what’s available for sale. I’d love to help you find your way home to Puerto Vallarta!