Buying a Home With Owner Financing

Buying a Home With Owner Financing


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Purchasing a home is a big step to take. There are many complicated components that make up the process. One of the largest obstacles that buyers face is financing.

Why Is Home Financing A Major Hurdle

Mortgage companies are much more picky today when it comes to giving out loans. There was a time that banks were handing out large loans without properly assessing the individuals.

In turn, many properties went into foreclosure, and the banks were left to deal with their bad investments. For that reason, banks have tightened down on approving large loans.

My Credit is Great But the Bank Won’t Lend Me Money

Even if you have a high credit score, there can be other factors that cause the bank to deny the loan. The property you are purchasing is often the hold up.

Banks do not want to get stuck with a piece of property that the can’t sell should you forfeit your loan. The lending department might take you through a series of additional inspections if they think the property isn’t worth the investment.

When to Look at Owner Financing

At the end of a loan process, you might not be approved. What do you do then? An overlooked solution is owner financing. This is when the sellers hold the note for the property.

A seller can use this as a way to attract potential buyers. There are benefits for both the seller and buyer in this contract.

One perk for sellers is that owner financing is a good way to bring in income. They will charge the buyer interest on the loan just like a bank would. They can also qualify for tax breaks.

For the buyer, this can be a cheaper route. The seller might charge a little more for the interest. However, you will not pay the huge closing costs demanding by the banks.

Owner financing can be a win win situation for both parties. For the buyer that isn’t approved for a home loan, this is a great solution. For a seller that needs a bit extra cash flow, the problem is solved for them.

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