Advantages of Seller Financing

I know I can (and will) look this up, but my question is:

What are the advantages for a seller who holds a purchase mortgage note in order to finance a buyer?

Let’s say the buyer is actually going to live in the property and will pay the seller on a 30 year term at 3% interest, with 10 years being interest only and 25 years principal and interest…

Let’s say that the seller is the buyer’s uncle.

Furthermore, let’s say that the seller or uncle is building a 4br MONSTER house in an exlusive town on Long Island and plans to sell it for 650k. (I think he files those 1031 exchanges normally).

So let’s say he, the seller/uncle is considering this deal from me, the buyer/nephew for a sale price of say 620k (family discount)…

What are the seller’s advantages of holding such a mortgage (I’ll be putting down 50 to 70k so he’ll be getting some cash at closing, plus monthly mortgage payments thereafter.

Looks something like this for seller/uncle:
120 months of $1375.00 payments - automatic withdrawal from my account to his…

300 months of $2608.16 payments - automatic withdrawal from my account to his
I will claim interest on taxes just as I normally would and pay my own taxes and h/o insurance on the property

for a total of 35 years for a total payment of
$944,839.84 + 70,000 (down payment) = 1,014,839.84

Total Interst Earned: $397,449.05

So again, what are seller’s advantages of taking this deal - like tax advantages…disadvantages?


The buyer’s advantages (in case you’re wondering) is at the minimum…a modest growth of 6% equity growth per year ($39,000)…and this is modest - this house is in North fork of Long Island.

This house will be worth well over a million, I’d say 5 to 8 years from say a closing date of October of this year. Even with the market cooling now…this house is in prime area of exclusive real estate (but it is not the hamptons were market pricing is just out of control…BUT STILL GROWING!). It’s amazing, here on Long Island, 4, 8, 12 Million dollar homes are selling…like crazy