What exactly does “owner financing” mean?
Filed in Renting & Real Estate on Aug.07, 2008
The owner of a home is motivated to sell, so in the brochure it is listed ……. Motivated seller is willing to offer owner financing. How does that work?
By: matty21620
About the Author:
By: matty21620
About the Author:
August 10th, 2008 at 10:10 am
owner is the banker
August 11th, 2008 at 10:01 am
it means the owner will hold the note for you instead of a bank or mortgage co.
August 14th, 2008 at 6:29 am
Usually it means that the seller of the house will pay the buyer’s closing fees. You can email me for more info.
August 14th, 2008 at 6:19 pm
Yes it means that the owner will carry “the Mortgage”, you give suitable downpayment, you and the owner enter into a contract for you to pay him monthly payments, for a certain term, or whatever you both agree to. But usually it will be sold on an “aggreement to sell” basis..The ownership in the property will be held by the seller until he is paid off and then transferred to the buyer
August 15th, 2008 at 2:48 am
the owner loans you the money to purchase their home. They don’t actually have to loan you the money, because the money is in the value of the house they are selling.
August 16th, 2008 at 2:25 am
The owner will offer to hold your mortgage. This may be good or bad, depending on his terms. If you are inclined to buy his house, my advice would be, if you are considering his offer to finance, to find someone knowledgeable in financing to guide you. Usually this type of offer should be a better deal for you than conventional lender rates, but “caveat emptor”.
August 18th, 2008 at 1:22 pm
It simply means that the owner will be the lender for all or partial of the purchase price.
It works like any other home loan. You sign a promissory note secured by the property.
Regards
August 18th, 2008 at 5:27 pm
You pay the owner, not a bank, monthly payments, but be aware many people out there are looking for such contracts to buy up as safe investments, so whoever you buy from won’t end up being the person you pay down the road, nice little old grandma mightforgive a late payment, whoever she sells the land contract to will hope you miss a payment so they can throw you out. It’s all in how teh finance contract is written, what terms and percentage you can get, etc.
August 20th, 2008 at 10:04 am
The owner wants to get out from under something (be careful) so they have good credit and will get the loan under their name and then you pay them. The home is never owned by you until the loan is entirely paid off then the home goes under your name.
What’s weird about this kind of financing (although it sounds good for people with bad credit) is that if that seller is funny he can accept a bid on the house to sell the home while you’re living in it and assume that you have an unbreakable contract with him. Also, if the owner dies and the home gets passed down to his wife or kin and they determine they want the money, they can sell the house from under you because the loan needs to be paid off immediately so they can get their money, and the home would be sold and you’ll be out on the street.
So you see, owner financing is a scary way to own a home.