Trading up is one of the basic philosophies of wealth building through home ownership. The basic idea is to buy a home and build equity in it. This can be done through home improvements, paying down the mortgage and natural home appreciation. Once you have sufficient funds, you sell the home and buy a more expensive one using your equity gain.

As our society ages, trading down is becoming a more common phenomenon these days. Why? Well, a generation of baby boomers are now reaching a magical age ? an age when kids move out of the house to go to college or get on with their lives. Once kids move out, couples find themselves living in a home that is too big for their needs. The solution is to sell the home and move to one that fits better. Since the new home will typically be smaller, it will also often be priced less than their current home.

If you find yourself in a trade down situation, you have a tremendous advantage when it comes time to sell your ?family? home. Why? Well, you have plenty of equity to play with. The way to use it to facilitate the sale of your home is to offer seller financing.

Seller financing is simply what it sounds like. As the seller, you offer to finance part of the purchase price for potential buyers. This allows buyers to get primary financing much easier than might be the case if they try to finance the full price of your home. As interest rates rise, the benefits of this approach cannot be understated.

If you offer seller financing, you are going to place your debt in the econd position for the home. In English, this means the borrower's lender will have the first lien on the home for the primary mortgage and then your loan will be secured second. Securing your loan is done by filing it on the title of the home. Most states make this a pretty simple process with forms. If you are unsure about how to do it, consider having a real estate attorney take care of it. Lawyers can be expensive, but this should not run you more than a couple of hundred bucks.