The purchase contract should specify the amount, interest rate and term of the seller financing and include a clause allowing you to approve the buyer's financial situation before you go ahead with the loan. Minimize your relocation stress. Our moving section offers checklists, free services, tips and more. Call your accountant and your attorney. Lending money to someone who is buying your home will affect your income tax situation.
Interest earned on the loan is taxable income.
The loan documents should be drawn up by your attorney. Set a shorter term. Balloon payments are common too. Consider the collateral. Your loan to the buyer should be secured by the property, so you'll be able to foreclose and evict the buyer if he or she defaults on the loan.