Owner Financing

When a homeowner has difficulty selling his or her home in a buyer’s market such as we are now experiencing with tight lender guidelines, owner financing is a desirable option for both seller and buyer.  How this works is that the seller carries the purchase price – minus the down payment provided by the buyer.

Sellers usually require a sizeable down payment to protect their equity as they believe buyers are less likely to default if they have invested a chunk of their own money in the transaction.

If there are no loans on the property and  it is owned by the seller free and clear, one of the many types of financing includes a land contract.  In this type of transaction, the buyer obtains equitable title.  Legal title does not pass to the buyer until such time as the final payment as made.

Owner financing provides a number of benefits to both parties in the transaction.  The buyer does not have to adhere to qualifications required by a banker or mortgage loan company.  Seller’s financial requirements are usually considerably more flexible and less stringent than those of traditional lenders.

Both parties can discuss and determine type of payment options and interest rates.  The amount of down payment can be more easily negotiated and the buyer saves on closing costs since there are no discount or loan points and other various administration costs he or she is required to pay.

Since there are no third parties involved in the financing process to cause delays in buyer possession, the entire transaction from start to finish can be much faster based only on negotiations between seller and buyer.

Author Bio:

Tasha specializes in Dallas apartments for rent focusing on Downtown Dallas Apartments.

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