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Even a decade ago, it was not much difficult to obtain a mortgage as it is now. Home prices were high and lenders had abundant cash at their disposal, making mortgage loans easily obtainable. Even stated income loans and no-doc mortgages were available. The housing market crash of 2007-08 has however reversed the situation and brought about some belt-tightening measures in the market. Currently, the stated income loans or no-doc mortgages have disappeared from the market and the criteria to obtain a mortgage loan have become more stringent. These market realities have forced the home buyers and sellers to become more creative. One of the creative strategies adopted by them is the owner financing.


What is meant by owner financing?

Owner financing takes place when a property buyer finances the purchase directly through the person or entity selling it. This takes place when a potential buyer can't obtain the necessary funds through the third-party lenders. Owner financing may also take place in case the home buyer is unwilling to pay the prevailing market rate of interest. Again, in case the seller finds difficulty in selling the house, then the seller also may be interested to opt for owner financing.In owner financing, usually the purchase price of the house is partially financed by the home seller and the rest of the amount is financed by taking out a smaller loan. Owner financing is also called as 'seller financing' or 'creative financing'.
Owner financing is common in a buyer's market – a market which has more sellers than buyers. To safeguard his/her interest, the home seller may ask for a high down payment of 20% or more. Here however the deed of the property is not transferred to the buyer unless all the payments are made in full. Since no institutional lenders are involved here, the terms and conditions of the mortgage are negotiable. In fact, terms and conditions are set up in such a way so as to provide benefits to both the buyer and the seller.


What are the different types of owner financing?

In owner financing, sellers and buyers negotiate on the terms and conditions of the transaction, subject to the regulations in the particular state. There is no fixed percentage of down payment that the buyer has to pay to the seller. Down payment percentage may vary from a very low level to as much high as 30% or above. Higher down payment protects the home sellers from the risks of default by the home buyers. Owner financing can be done in the following ways-
  • Land contract
  • In land contract, legal title of the home is not transferred to the home buyer but the buyer is given an equitable title, a title that fetches temporarily shared ownership. Payments are made by the buyer to the seller and the buyer becomes the owner of the property once the final payment is made.

  • All-inclusive mortgage
  • In this type of owner financing, the home seller is responsible for carrying a mortgage promissory note that is equal to the difference between the home price and the down payment amount.

  • Junior mortgage
  • In the current market conditions, many lenders are not willing to offer finance more than 80% of the value of a home. Home sellers may come into the scene and can make up for the difference. The home seller can take out a junior mortgage to compensate for the deficient amount of the home buyer. Here the seller can take out the junior mortgage from the first mortgage taken out by the buyer from the first mortgage lender. However, taking out a junior mortgage loan is comparatively risky as in the event of default by the home buyer, the first mortgage is repaid first and the junior mortgage is paid off later.

  • Lease agreement
  • Another form of owner financing is the lease agreement where the home seller gives equitable title to the buyer and leases the home for a contracted term such as an ordinary rental. Once the agreement is over, the buyer has to take out a mortgage loan equal to the purchase price of the home minus the total rent payments made.


What are the different benefits of owner financing?

Owner financing offers several benefits to both the buyers and the sellers. Most of the times, this type of home purchase is a win-win situation for both the parties.

Benefits to the home buyers

Despite the high down payment that the buyer has to make, owner financing offers several benefits to them -

  1. Easy qualification criteria
  2. Because of the relatively easy qualification criteria, many home buyers prefer owner financing over traditional financing. Due to recent bankruptcy or divorce, the home buyer may have poor credit, making him/her ineligible for a traditional home financing. Again, the home buyer may be a self-employed person and may not have the necessary documents in support of his/her income. The home buyer may also be very new in the job market and may not fulfill the criteria required to obtain a traditional loan. In addition to these, there are many other reasons which make a home buyer not eligible to obtain traditional financing. Owner financing is certainly a very good choice for these home buyers.

  3. Tailor-made financing
  4. Unlike the traditional financing, here both the buyers and the sellers have the flexibility of choosing from a variety of payment options such as fixed-rate amortization, interest-only or a balloon payment. Home buyers can decide the payment option by negotiating with the sellers.

  5. No/low closing costs
  6. In case of owner financing, home buyers aren't required to pay the closing costs which the home buyers have to pay compulsorily in case of conventional financing. Loan origination fees, processing fees, points, title insurance, underwriting fees, administration fees and many other fees charged by the traditional lenders add up to thousands of dollars. By opting for owner financing, home buyers can avoid these costs.

  7. Faster closing
  8. Here the buyer and the seller are not dependent on a lender to process the loan. Absence of any third party lender, ensures faster closing of the transaction.

Benefits to the home sellers

Sellers aim at obtaining as much price as possible. Sellers also want to enjoy tax saving benefits on the gains accrued. Benefits to the sellers are listed below -

  1. Highest price
  2. Since the seller is offering the financing at soft terms, the seller may want to receive more than the fair market value of the property. Buyers may also be agree to pay the premium as they can't qualify for traditional financing.

  3. Tax saving benefits
  4. In case of owner financing, home seller sells the property in installments. Home seller reports only the income received in each calendar year. This means that here the sellers have to pay less tax.

  5. Monthly cash flow
  6. The monthly payments that the home seller receives from a buyer, increases his/her monthly cash flow. This in turn raises the spending capacity of the seller.

  7. Selling a hard-to-sell property
  8. It may be the case that the seller is finding it tough to sell the property through the conventional route. Through owner financing, a home seller can sell an otherwise hard-to-sell property with lot ease.

Before agreeing to owner financing, both parties should consult separate legal counsel in their state.

Related Readings
Related Forum Discussions
jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi annie,

As far as I know, yes, it is true that all the tax breaks that are available to a new home owner with a traditional mortgage are not available in a seller-financed situation. In a seller financed situation, you will become the sole owner of the property only when you pay off the loan as per the agreement.

Thanks

Like | Dislike | Share | Posted: Sat, 08/25/2012 - 00:38 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have an owner finance agreement and the term ends July 2, 2012 if we dont [url=http://www.mortgagefit.com/refinance.html]refinance[/url]. We are 1 month late and now the owner says we have an illegal agreement and are just renters. He posted a 15 day notice to vacate. Do I have rights?

Like | Dislike | Share | Posted: Sat, 03/31/2012 - 10:07 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi gizmo,

You should go through the owner finance agreement and also take the help of a real estate attorney in this regard. He will let you know whether or not the agreement will be considered as illegal. You can also check out with the attorney as to what steps you need to take.

Thanks

Like | Dislike | Share | Posted: Mon, 04/02/2012 - 01:19 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'm in Colorado--when we wrote up RE contracts for seller finance, we capped it at going rate of 6.5%. However, there are predatory investors who want to finance it at higher rates 8% x 30 yrs---this makes it impossible to do a reasonable pay down/off-- Any advice on this predicament? Any laws?

Like | Dislike | Share | Posted: Tue, 11/20/2012 - 21:51 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you're going for seller finance, then you won't have to get concerned about the predatory investors. You will have to pay the seller whatever is mentioned in your contract.

Like | Dislike | Share | Posted: Wed, 11/21/2012 - 22:42 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We currently are in process of purchasing a home/land and need to pay off debt and or reduce mortage payments
Is this possible with poor credit

Like | Dislike | Share | Posted: Fri, 06/01/2012 - 18:46 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

a friend purchased a mobile home. the purchase price was one thing but the written agreement was a lot lower. after moving in my friend found numerous problems which the seller has refused to fix. my friend wants to know which price they should pay, the one that oral agreement or the written one that both parties signed. this is a owner finance situation

Like | Dislike | Share | Posted: Sat, 01/26/2013 - 17:12 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi atloss,

Of course, the written agreement should be given importance and the amount mentioned there should be paid.

Thanks

Like | Dislike | Share | Posted: Sun, 01/27/2013 - 23:19 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Jennieh,

With a poor credit, it will be very difficult for you to qualify for a new mortgage. Most of the lenders will want you to have good credit so that they can consider you for a loan.

Like | Dislike | Share | Posted: Mon, 06/04/2012 - 01:26 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i went thrpugh a realtor to buy a house with the owner financing. I put down five thousand dollars on March 15. By the way the realtor is my uncle. I signed a contract in March. I havent heard anything since. When i try to talk to him he is always busy. i just want my money back and not geal with him anymore. What do i have to do?

Like | Dislike | Share | Posted: Sun, 06/24/2012 - 04:31 | Post subject:

jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi j wilson,

If you cannot deal with the realtor and the lender on your own, then it will be better if you could contact an attorney and ask him to deal with the concerned person. The attorney will let you know what you need to do in this regard.

Thanks,

Jerry

Like | Dislike | Share | Posted: Mon, 06/25/2012 - 03:25 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you owned a property free and clear with is a better investment renting or owner financing.

Thank Greg

Like | Dislike | Share | Posted: Sun, 07/01/2012 - 13:52 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi greg,

If you want to sell off the property in the long run, then owner financing will be a better option. However, if you want to keep the property as an investment, then you can opt for renting it.

Thanks

Like | Dislike | Share | Posted: Sun, 07/01/2012 - 21:55 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'm the buyer: can the terms/conditions of my loan change without my consent if the seller sells the loan?

Like | Dislike | Share | Posted: Mon, 11/19/2007 - 13:36 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Cynthia,

As far as I know, the seller may sell the note without the buyer's consent and he is given a notice about this change. But the terms and conditions cannot be changed without the buyer's consent. Even if the investor wants to make such changes, he should inform the buyer about that.

Like | Dislike | Share | Posted: Tue, 11/20/2007 - 01:51 | Post subject:

john_hig's picture
john_hig | Joined: November 30, 2007 02:56 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

was curious if my wife and I sell our house and carry the note , total profit is less than 500,00. are we still free from capito gains tax, even if we fincance the loan for 20 years ??

Like | Dislike | Share | Posted: Fri, 11/30/2007 - 15:02 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi john_hig,

Welcome to this forum.

I think for the married joint filers, homeowner can get exemption from capital gains taxes for up to $500K under the Taxpayer Relief Act of 1997. And your profit is less than $500K. So you can get the exemption.

Thanks,
Larry

Like | Dislike | Share | Posted: Tue, 12/04/2007 - 09:44 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi
I am about to purchase a house from an owner who is going to finance for me... he owes $225K, and we agreed on $265K selling price, with $15K down... he is refinancing his current loan, and going to carry the remainder as well... After reading all of the replies, I am thinking that if the owner still owes on the house, that this may not be a possibility? My email is tonywindle at gmail.com if anyone wishes to contact. THANKS!

Like | Dislike | Share | Posted: Wed, 12/26/2007 - 14:15 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Twindle,

Is the seller doing the refinance in his name? In that case, I don't think the lender will give his consent to transfer the ownership rights to you.

It will be better if you talk to the lender first and then decide.

Like | Dislike | Share | Posted: Thu, 12/27/2007 - 04:41 | Post subject:

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Twindle,

Welcome to our forums.

What I understand from your post is, the seller will do an owner financing for an amount worth $265K and you'll pay $15K as down payment. Now, the seller has to repay $225K, which can be done using the sale price but right now he's not getting the entire price from you because you will be making that in installments. So, he wants to refinance the house in his name, is that ok?

But the problem is, if he refinances the loan in his name, the lender would want him to be on the title rather than allow him to sell off the home to you or anyone else. So, refinancing won't be the possibility here.

Another way out is, you assume the mortgage while buying the home, but then there will be two mortgages for you, one for the refinance loan and the other the owner financing (which you will perhaps treat as a mortgage and not a typical contract for deed). And, I don't know how easy it will be for you to manage two loans. Moreover, the lender will need to approve you before allowing you for the assumption.

Good luck!

Like | Dislike | Share | Posted: Thu, 12/27/2007 - 04:59 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi - thanks for the responses... looks like we are doing a wrap around & the escrow company is handling the paperwork and paying the lender. I guess the risk is if the lender finds out, and 'calls the mortgage' which I am not really sure what that means... cheers!

Like | Dislike | Share | Posted: Fri, 12/28/2007 - 13:27 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Yes twindle, it looks almost like a wrap around loan. But if the lender comes to know of it, well then, he may call the loan due using the due on sale clause. So, there is risk involved here. But as long as you make the payments to the seller in time and the seller makes it in time to his lender, there's no chance that the seller's lender may demand immediate payment from the seller.

Thanks

Like | Dislike | Share | Posted: Mon, 12/31/2007 - 03:41 | Post subject:

lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Lease to purchase or a land contract would be options to for the buyer to purchase this home.

Like | Dislike | Share | Posted: Mon, 01/07/2008 - 20:48 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you hold a first mortgage on a property can you still owner finance for 100% of the first mortgage as a second to a propective buyer???I.E. be the middle man for the bank

Like | Dislike | Share | Posted: Mon, 01/21/2008 - 07:54 | Post subject:

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Santos,

What I can understand from your query is,

You have a home with a mortgage on it and wish to sell it off. The buyer will not assume the loan but consider it as owner financing - that is, you will be paying for the loan with the funds paid by him every month as a part of the owner financing deal. Thus, the owner financing will act as a second lien on your property.

However, I doubt whether your lender will allow for it. This is because when you sell off the home, either you are expected to pay off the loan or else let the buyer assume the loan with the approval of the lender. And, it is better not to hide the owner financing deal, as the lender can charge you a penalty if he comes to know of it because he has invested into the property and he hasn't received the entire payment yet.

Moreover, if your loan contract has a due on sale clause, then the lender might immediately ask for the entire balance once you sell off the property.

Please let me know if that's what you have asked for.

May God bless you.

Samantha

Like | Dislike | Share | Posted: Tue, 01/22/2008 - 00:11 | Post subject:

livinginnky's picture
livinginnky | Joined: September 8, 2007 08:31 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello everyone,

There is a simple solution to this problem. The easiest way to accomplish this would be with a rent to buy. The buyer would simply sign a lease just like a standard rental agreement would look. In addition you would attach an addendum which states that on such and such a date and for this much money A. will buy property from B. That way everyone is protected and nobody runs the risk of losing seriously. There are obviously still risks but this way the original lender can't call a "due on sale" clause. And the new buyer has a legitimate stake in the purchase (if he/she can qualify through a lender). You can still put money down or structure the purchase how you see fit.

Like | Dislike | Share | Posted: Tue, 01/22/2008 - 10:07 | Post subject:

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks Eric. It is indeed a good way to avoid risks on account of the due and sale clause. Instead of having a second lien, it is better to go by this method. Thre best thing is, it offer protection to all parties involved in the transaction.

Like | Dislike | Share | Posted: Wed, 01/23/2008 - 02:29 | Post subject:

livinginnky's picture
livinginnky | Joined: September 8, 2007 08:31 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

I should add that local laws will have something to do with the determined agreements as well. Rent to buy as I have shown is not legal everywhere, just like lease options and land contracts. Different local laws can have an effect on what financial tools you use. Just wanted to throw that in, but not wanting to complicate the matter. Oops, Looks like I just did. So with that said it is always a good idea to consult with a reputable local attorney.

Like | Dislike | Share | Posted: Fri, 01/25/2008 - 08:46 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am buying some acreage from the seller and he is financing. Can he ask for payments to begin before we get the land surveyed and have the closing? We signed the purchase contract in November and we were supposed to have the closing in mid December but we could not because the surveyor could not get to us until this February. Now the seller says we forfeited because we did not make a payment in January and another payment is due at the end of this week. The purchase agreement says that interest will accrue starting December 15 and payment begins January 15 and on the 15th of each month after that. Are we supposed to have made payments in Jan. and Feb. even though we have not had a closing?

Like | Dislike | Share | Posted: Tue, 02/12/2008 - 18:11 | Post subject:

Jessica's picture
Jessica | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

Welcome to our community forums.

I think everything should go by the contract. If your contract says payment should begin in January, it should start then only. But does your contract say anything about an upfront payment? may be the seller is asking for an upfront payment in the form of down payment.

However, if the closing is not yet done, then the monthly payments should not start. The seller should have amended the contract then. He can at least ask for the down payment but not the monthly payments. I think you should have a straight talk with him and if he's not willing to listen simply stay out of this contract, if possible or else seek legal advice from an attorney.

Regards,

Jessica.

Like | Dislike | Share | Posted: Wed, 02/13/2008 - 02:02 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I HAVE A QUESTION. IM NEW TO SELER FINANCING AND I HAVE SOMEONE WHO'S INTERESTED IN DOING SELLER FINANCING WITH ME B/C IM NEW TO THE COUNTRY AND DONT HAVE ALOT OF CREDIT. I KNOW THAT THE SELLER OWES MORE ON THE HOUSE THAN WHAT THEY WANT TO SELL IT TO ME FOR. IT SOUNDS LIKE A GREAT DEAL. BUT IM WORRIED AND WONDERING HOW CAN I BE COVERED TO MAKE SURE I OWN THE HOME WITH A CLEAR TITLE OR SOME KIND OF INSURANCE? SO I KNOW NO ONE CAN TAKE THE HOME FROM ME?

Like | Dislike | Share | Posted: Fri, 03/28/2008 - 14:54 | Post subject:

helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

i've already replied you at http://www.mortgagefit.com/shortsale/owner-financing.html . Please have a look at it.

Like | Dislike | Share | Posted: Sat, 03/29/2008 - 01:13 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome madamx,

I feel you should contact an attorney. He will handle the paperworks to make the deal legal.

Like | Dislike | Share | Posted: Sat, 05/24/2008 - 04:14 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Who would you go to that would handle paperwork to make an owner finance deal legal and on paper?

Like | Dislike | Share | Posted: Fri, 05/23/2008 - 10:33 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

he said he would owner finance for the 20 years he has left on the house what happen after he pay it off do the deed go in my name

Like | Dislike | Share | Posted: Wed, 06/18/2008 - 09:22 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest.

Are you the owner of the property? If so are you ready for the owner financing? Now the buyer will get the property on his name after paying off the loan but if he cannot pay the loan off then you can even foreclose.

BTW is the buyer want to assume the loan? You need shed a bit more light on this so that we can help you better.

Best of luck,
Larry

Like | Dislike | Share | Posted: Thu, 06/19/2008 - 04:27 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

A note broker presented a contract to my seller. He is a bad scenario? The owner/seller has a first mortgage on the property for $110,000. We create a promissory note for the sale price of $131,000.00 with a 360/month 7.5% interest rage. The promissory note is never registered or recorded but the tenants/borrowers have occupied the property on a lease/purchase contract for 24 months. The seller gives back 3% for down payment. The unrecorded promissory note and seller financing contract were negotiated with a note buyer and he offers $80,000 for the promissory note. Who pays off the first lien or is it really going to be paid off by the new buyers. Does the tenant/borrower on the promissory note have to be present for the transaction. Does the seller/owner financing have to notify the lender that he sold a promissory note? Any comments.

Thanks
Donna

Like | Dislike | Share | Posted: Sat, 07/05/2008 - 20:03 | Post subject:

brian1's picture
brian1 | Joined: June 14, 2008 05:14 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Donna if you are one of the principals in that scenario seek out a RE atty what it sounds like is the seller is trying to double the money and is creating a fraudulent note. If you are the buyer I would be leery as it sounds like you could end up owing on 2 notes. I am not sure as I have read multiple times and still am not clear on what is taking place... a few hundred now or thousands later?

Get an Atty.

Brian

Like | Dislike | Share | Posted: Sun, 07/06/2008 - 01:25 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We have been leasing a house for 2 years, we do not have the down payment nor the credit to purchase the home,yet.......can the owners, Owner Finance, if they have a loan on the home? If so, how would that work and what would we be expected to do? What would be the best way to get in this home?

Like | Dislike | Share | Posted: Fri, 08/15/2008 - 05:44 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Guest.

In this financial turbulence, if you don't have very good credit, then I would suggest you not go for the loan. Try to improve your credit first. How bad is your credit? Check out the Credit Repair Tool to analyze and repair your credit.

Hope it helps. Ask the community if you have any more questions

Like | Dislike | Share | Posted: Sat, 08/16/2008 - 02:13 | Post subject:

Jessica's picture
Jessica | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi guest,

Owner financing is a good alternative to traditional loans especially when you credit isn't good enough and you need to have a home of your income. But when it comes to owner financing, you're dealing with a seller and not a third party lender. So, make sure that you sign on all required legal documents and read the fine print prepared by the seller's attorney. It's best if you can get the contract reviewed by an attorney.

Since the seller has a loan on the home, does he intent to pay it using your rent payments or does he want you to assume the loan later on? verify this because as it is chances are less that you'll be allowed to assume the loan by the lender who've provided it. This is because your credit isn't good. Moreover, ask the seller if his lender has no problems if you enter into an owner financing contract with the seller. This is indeed important as the lender may ask the seller for the unpaid balance if he violates terms and conditions stated on the loan contract.

I hope you understand there are legal complications here. So, you need to know everything about the seller's transaction with the lender before you make a deal with him.

Regards,

Jessica

Like | Dislike | Share | Posted: Sat, 08/16/2008 - 05:18 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My client has this land that he has, wanted to sell and needs to create a(an)
owner-finance or exchange for paper. What is the process? Do you do this service

Like | Dislike | Share | Posted: Mon, 08/25/2008 - 12:31 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome beverly.

The seller goes for Owner financing if the buyer doesn't have good credit and cannot get the loan to purchase the property. It helps the owner to sell the property quickly.

This is a community which helps people with answer and suggestions to myriads mortgage related and other financial questions. So I feel you should contact with a real estate agent to do the service for you.

Like | Dislike | Share | Posted: Tue, 08/26/2008 - 05:31 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

What if what you give to the seller they don't make the mortgage paments that I am paying towards the house - how do you protect against that?

Like | Dislike | Share | Posted: Tue, 08/26/2008 - 19:38 | Post subject:

helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Sue.

In an owner financing transaction, if the seller isn't making mortgage payments, well then you need to talk to the lender, though you may not have directly dealt with him. I think you need should have a straight talk with your seller and see what he's trying to do. If he doesn't pay down the mortgage, he may lose the home to the lender and then all your cash payments to the seller will be simply wasted!

Check out your owner financing contract and find out if it speaks of any such protection or legal step that you be able to take. You may contact an attorney for any further course of action.

Thanks.

Like | Dislike | Share | Posted: Wed, 08/27/2008 - 03:00 | Post subject:

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

we are selling our house(we had to relocate), but we had gotten a 2nd mortgage 3 years before we put it on the market because we needed things done on the house. So our asking price is more than what are house is worth. We have a lot of offers for what the house is worth. What are some of our options.

Like | Dislike | Share | Posted: Thu, 09/04/2008 - 06:48 | Post subject:

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Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi guest,

You'll have to look out for a buyer who is ready to assume the [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url]. If you aren't getting such a buyer, the only way to get rid off the second loan is to pay it off. Does your second lender know that you're relocating?

Like | Dislike | Share | Posted: Fri, 09/05/2008 - 05:31 | Post subject:

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

So what kind fo contract should i do. for owner finance to flip the note?

Like | Dislike | Share | Posted: Wed, 09/17/2008 - 09:28 | Post subject:

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I think you should contact an attorney as to what legal document needs to be drafted.

Like | Dislike | Share | Posted: Sat, 09/20/2008 - 10:50 | Post subject:

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

what would be the benefit as a buyer to buy a home with owner financing then turning around and refinancing this home ( i have excellent credit dont need to do this but have heard of it being done and was wondering why I think I know the answer but need it explained to meby a pro

Like | Dislike | Share | Posted: Thu, 09/25/2008 - 19:07 | Post subject:

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