There are many pros and cons to holding a mortgage when selling a house

Q: What are the pros and cons of holding a mortgage on a house I'm selling? -- e-mail.

A: The pros are:

• Your property may sell more easily because buyers are attracted to "seller may finance."

• Your buyer will save on many of the closing costs associated with an institutional mortgage.

• The building won't have to pass a bank's inspection or appraisal.

The cons are:

• Will borrowers make the monthly payments? Why do they want to find seller financing? If they can't qualify for a regular institutional loan, should you take a chance on someone that banks consider too risky?

• If you had to foreclose, there's no telling what shape the house would be in if you got it back. You don't know the legal expenses, how long the occupants might remain there without paying or any back taxes that might be owed.

• The money you'll have permanently invested in that mortgage could earn more elsewhere when rates go up,

• If you owe a mortgage, you'll have to pay that off in cash when you sell.

Some other considerations are:

• You'll have a fixed-income investment, collecting a specific amount each month.

• Your money will be tied up for many years.

• If you're selling your own home and qualify for the home sellers' tax exclusion, you probably won't owe any capital gains tax. Otherwise, you'll pay tax on your profit -- bit by bit as you collect it each year.

Precautions to take:

• Have your own lawyer and CPA help you analyze would-be borrowers' credit reports.

• Negotiate as large a down payment as possible. That cash represents some safety for the loan.

• Rely on your attorney to draw up the documents, but make sure the buyers use a lawyer, too.

What's written in stone?

Q: I will be paying cash for a little Central Florida duplex. I do have an agent working on this. Once the inspection is approved, the bank wants to close on Feb 21. Is this date "written in stone"? I intend to be there, but I can't be there by the 21st. Also, if it has to be Feb. 21, can this be done by mail?

-- B.J.

Q: I haven't seen your documents, but with most sales contracts, the closing date is simply a target. Florida real estate agents and banks must be used to dealing with out-of-staters who need to adjust travel dates or set up long-distance settlements. I'm sure they'll arrange things for your convenience.

Can't find certificate of occupancy

Q: I bought my home in 1978. I can't find my certificate of occupancy, which would have been issued in 1978. Is it important that I retain this document? And would it be required if I ever sold the home?

--D. McG.

A: The local government issues a certificate of occupancy after its building inspector finds the property meets standards and is fit for human habitation. In some areas, it's required for the selling of a multiple dwelling, while it's required for every residential sale in other places. Just about everywhere, it's needed before a newly constructed house can be occupied.

In any event, a new one would have to be issued after a fairly current inspection. No point in worrying about an old certificate of occupancy, which would have long since expired.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at


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