Owner financing is a good option for investors as it offers higher rates of return. A seller needs to negotiate an interest rate that the buyer should pay them. This interest rate should be more favorable compared to any other type of investment that the seller may have thought of.
If the seller can structure the owner financing as an installment sale, he may get certain tax benefits on capital gains. Any investor going for owner financing should consult a tax advisor for the maximum tax advantages.
Take Care
Mac_7 Guest
Posted: Wed Sep 17, 2008 5:55 am Post subject:
Gwen,
Your home should be paid off prior to selling it off through owner financing. What's the difference between the home purchase price and the appraised value?
Ryan Guest
Posted: Wed Sep 17, 2008 6:26 am Post subject: Reply to Sara
Hey Sara,
I think that you misunderstood the spirit of my question. I am looking at this through the eyes of a investment buyer. It is important to a lot of investors that they never spend their own money nor use their own credit to finance a deal. With that being said, what other upsides do you gain owner financing rather than getting a conventional mortgage?
Appraise value and purchase price can't be same for a house. They are more of less closer to each other.
Coming to your second question, it is always better to pay off before you carry back. In case you don't pay back and the lender comes to know then he can take legal actions against you.
Feel free to ask if you have further queries.
Sussane
Dorene Guest
Posted: Tue Oct 28, 2008 12:39 pm Post subject: owner refinance
I have my home with mortgage and am needing to sell due to job relocation. I am considering offering owner refinance to potential buyers. Looking at the options, I am thinking the deed of trust where they would be given time of 3-5 years to secure their own financing for payoff. What is recommended for down payment, does that have to go to the home or put as earnest money? Also, as the seller, what tax advantages, besides the mortgage interest and property taxes do I have? All they would have is the morgage interest they pay to us, right?
I am trying to learn all I can before I get into something here.
You and the buyer can decide as to how much down payment you will be taking. You can then decide on the monthly payments and the rate of interest you will be charging the buyer. Owner financing also allows the seller to postpone their tax liabilities. In some cases, owner financing will also reduce their tax liabilities.
Posted: Mon Feb 02, 2009 9:31 am Post subject: taking over payments
My buyer wants to take over payments and house insurance payments and pay the taxes. They want to one day own the home. They agree we need to get an attorney or title company. Is this owner finance? Do we need to ask for a down payment? We owe about 78,000.00 on the home. I am so confused- what should we do??
When you sell home to a buyer who takes over the payments officially, it is known as mortgage assumption. That is, the buyer takes over the entire responsibility of the mortgage loan and your name is removed from it. But yours is a slightly different scenario.
It's not a case of owner financing wherein a buyer purchases your house and instead of paying you the sale price in lump sum cash makes monthly installments. The entire transaction is drawn up by an attorney mostly in the form of a mortgage. So, if the buyer defaults, you take away your home.
But prior to selling your home to someone, you need to inform your lender. Here the buyer simply wants to take over your mortgage payments. What he wants is, he'll stay at a tenant in your property and pay for your mortgage. After some years, when he has the cash, he'll buy the home.
I hope I could explain the entire situation. If you think there's something missing, just let me know.
You can contact an attorney. He will handle the paperwork for you and also draft the owner financing agreement for you. Yes, you can have the buyer handle the closing costs.
Sussane
gabriela Guest
Posted: Fri Feb 19, 2010 6:10 pm Post subject: owc
we have in the process of buying a house the owner will carry the house is paid in full thers no loan .....my question is what happen if the seller is the frist on the lien? excuse my spelling my english is not good
While you owner finance the property, you will have to sign an agreement with the seller. This agreement will include the required terms and conditions of the loan. In this case, you would be the borrower whereas the seller will be the lender. As per the agreement, he will be able to take required steps against you if you default the loan. _________________ Good is the Enemy of Great.
So, as I understand it, if we ask 50% down(approx 125,000) and carry the balance (approx 125,000), if the buyer takes out a loan for the down and defaults on the loans, the bank that holds the first lien can foreclose and take the whole property? It seems that it would be wise to accept only cash for the down.
Maria Guest
Posted: Thu Mar 04, 2010 1:03 pm Post subject: Balloon
What can happen if I carry the loan as a first mortgage, but make it a balloon mortgage to be paid in 15 years.
Jasmine Guest
Posted: Fri Mar 05, 2010 12:50 am Post subject:
The buyer will have to refinance the loan after the 15 year period when the balloon becomes due.
sara
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