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What is owner financing for a house?
What is owner financing for a house? Are there any hesitations or concerns with owner financing for a house? How do I know if this is an option?
Asked By Brody | Sierra Vista, AZ | 272 views | Finance Legal Info | 1 year ago
Answer(3)
Julianne Clark / Your Lowcountry Realtor
Charter One Realty
Owner financing was popular after the real estate correction in 2008. It is used mainly when a house will not qualify for traditional financing or the Buyer is not able to get traditional financing. (Traditional financing meaning thru a bank) The basic understanding is that the owner collect "rent" for the property from you and a percentage of that will be applied to the purchase price. After several years, when either the condition of the home has improved (your sweat equity while living there) or the you can now qualify for traditional financing. Rarely is it a long-term event -- 3 years +/-. There are instances where the owner does act as the Lender and will do a long term loan. In this current market -- at least in my area -- owner finance is a think of the past or until houses stop selling and the owners decided that anyone living there is better than sitting empty without any income.
- 1 year ago
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Nicole Parker
Dennis Realty & Investment Corporation
Some buyers do not wish to deal with a traditional lender or know they will have cash to pay off the home in a short period of time. The seller of a home may offer owner finance which is usually a shorter term, with a balloon payment for the balance after 3-5 years, with interest.
- 1 year ago
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Donald Maycott
eXp Realty LLC
Owner financing for a house is a type of real estate transaction in which the seller acts as the lender. This means that the buyer makes regular payments to the seller until the purchase price of the home is paid off, rather than going through a traditional mortgage lender.
Owner financing can be a good option for buyers with limited credit or who are unable to qualify for a traditional mortgage. It can also be a good option for sellers who want to sell their home quickly or who are willing to accept a lower selling price in order to sell to a specific buyer.
However, there are also some hesitations and concerns with owner financing. For buyers, one of the biggest risks is that the seller may default on the loan, which could mean losing the home. Additionally, owner financing loans often have higher interest rates and shorter repayment terms than traditional mortgages.
For sellers, the biggest risk is that the buyer may default on the loan, which could mean having to foreclose on the home. Additionally, sellers may have to pay capital gains taxes on the profit from the sale of the home sooner than they would if they sold the home for cash.
To know if owner financing is an option for you, you should talk to a real estate agent or financial advisor. They can help you assess your situation and determine if owner financing is right for you.
In short, owner financing can be a good option for both buyers and sellers, but it is important to understand the risks involved before entering into an agreement.
- 1 year ago
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