New: The Seller Finance Playbook, our course on originating seller finance notes, is now open. See the course
How to put together a seller finance deal
1. Plan your deal terms
- Confirm the property is one you can sell with financing (clear title, no due-on-sale risk if it’s wrapped).
- Decide on sale price, down payment, interest rate, term.
- Sanity-check the payment against local rents.
2. Find a borrower
- Many successful seller-finance investors market directly: yard signs, Facebook Marketplace, Zillow with “Owner Will Carry” language, local Spanish-language outlets. You can also use an agent who is familiar with creative finance deal.
- Be explicit in the listing about the down payment required. This filters out the bottom 80% of unqualified inquiries who will be time-wasters.
3. Pre-screen your borrower
- Use the CTU Prescreening Guide
- Red flags to watch out for include: no documentable income, behind on current mortgage or rent, recent bankruptcy, no down payment, no SSN or ITIN number, other charge offs and credit line delinquincies.
- If the borrower passes the prescreen, agree on price and terms.
4. Have Call The Underwriter handle compliance and create the underwriting package
- Use the CTU term sheet form. This is also when you decide whether to add the $595 loan-document package.
- $199 of the $799 total underwriting fee is due at this stage. If the borrower fails to qualify your costs are capped at the $199 fee.
5. Borrower completes the application, authorization for soft credit pull, and provides their income documentation
- After you submit the term sheet we will automatically email the borrower (and copy you) with links for them to provide all of the required information.
- If needed, Spanish-speaking borrowers can be walked through the process in Spanish by CTU staff.
- CTU returns a Loan Estimate plus any conditions to clear (proof of insurance, additional bank statements, etc.) – along with our recommendations on whether the loan will be compliant and the risk level of the loan.
6. CTU underwrites the loan (24-48 hours)
- Full Ability-to-Repay analysis under Dodd-Frank’s 8 required elements.
- Soft credit pull, income verification, debt-to-income calculation, residual income check.
- CTU returns a Loan Estimate plus any conditions to clear (proof of insurance, additional bank statements, etc.).
- CTU returns our recommendations and lets you know whether or not the loan will meet compliance requirements.
7. Lender reviews the Loan Estimate and recommendations provided by CTU and decides whether to proceed with borrower.
- As the lender, you are the ultimate decider on whether or not to proceed with a loan. CTU will let you know whether or not the loan will meet compliance requirements and provide our recommendations.
- Lender responds to CTU with instructions on whether or not to proceed with this borrower, at this time we can also have a short phone call to discuss.
8. Choose title/escrow and (if needed) order loan docs
- Most investors use a local title company or attorney they already know. CTU works with whoever you choose.
- If you ordered the $595 loan-doc package, CTU prepares the note, deed of trust, and all state-specific closing documents.
- If you didn’t, your title company or attorney prepares them — CTU still issues the federally required disclosures (LE, CD, Dodd-Frank cert).
9. Closing Disclosure issued, then close
- TRID rule: 3 business days must pass between the borrower receiving the CD and signing. Build this into your timeline.
- Sign at the title company.
10. After closing
- Board the loan with a loan servicer. Self-servicing is legal but creates a compliance burden for owner-occupied loans. Most investors use a third-party servicer.
- File the recorded note and deed of trust in your records. Keep the full underwriting package — it’s what makes the note sellable later.
Vendors you will need
RMLO / Underwriter – Collects loan application and income documentation from borrower, prepares Loan Estimate and Closing Disclosures for TRID compliance, confirms borrower ability to repay to comply with Dodd-Frank, delivers full underwriting package.
Attorney – Prepares loan documents, verifies that your loan and documentation comply with any state-specific laws.
Title Company – Facilitates the sale by verifying ownership through a title search, issuing title insurance, managing escrow, and preparing the settlement statement for closing. They ensure all documents are signed, recorded, and funds are properly disbursed to complete the transaction.
Transaction Coordinator – Manages the administrative tasks of a real estate transaction to ensure a smooth closing. They coordinate communication between all parties, track deadlines, collect documents, and ensure everything is completed accurately and on time.
Loan Servicer – Collects payments, maintain records, manage escrow accounts, and handle communication with the borrower regarding the loan.
Vendors we work with
Transaction Coordinators
Creative TC, Specializes in creative finance transactions and offers Due on Sale remediation for wrap loans
Loan Servicers
Provident Loan Servicing, Services wrap loans, nationwide coverage
Madison Management Services, Services loans in 46 states
Note Servicing Center, Servicing loans for 40+ years
Attorneys
Alan Ceshker, TX, Specializes in creative finance deals, also provides closing services
Sottile & Barile, MI, OH, IN, IL, KY, WI, WV, In additional to real estate transactions handles foreclosure, evictions and bankruptcy
Loan Documents:
You will need to prepare a mortgage and note or deed of trust, depending on the state you are originating the loan in. As an option service, Call The Underwriter can prepare these for you for an additional fee. When you submit the term sheet to get us started on the deal you will be able to select whether or not you also want to include the loan documents. We can provide loan documents for all 50 states, but please note that we can not provide them for wrap loans or mobile home loans. If you are creating a wrap or mobile home loan we recommend having your attorney prepare your loan documents.