Owning a piece of property may seem like a dream for some people. Owner financing is making it possible for people who cannot obtain funding through a conventional mortgage to purchase a home. This financing option requires borrowers to work directly with the seller or entity selling a property.
The Benefits For Buyers
There are advantages for both parties when it comes to purchasing an owner financed property. Buyers will experience faster closing, cheaper closing options, and flexible down payments. Closing on a piece of property can be tedious if seller financing is not an available option.
Properties obtained through a mortgage company can take weeks, if not months to finalize. When purchasing directly through a seller, the closing can be completed in a few days. Traditional transactions will require buyers to put down a down payment of ten percent or more.
Sellers will have the option to decide on the down payment they require, which is generally less than a traditional payment threshold.
Buyers who have problems being approved through a mortgage broker, find seller financing to be their best option. Credit is usually not a problem in this type of scenario. Instead, the seller’s decision is based on the buyers work history.
Benefits For The Seller
With a seller finance option, sellers eliminate the red tape that is associated with selling a piece of property. Sellers can sell their homes in their current state, retain the title to the property, sell their home faster, and opt for a lump-sum arrangement. The seller will have complete control over the ordeal.
Most mortgage brokers require sellers to fix any issues within their properties that could create a health-risk to the public. In a seller financing agreement, a seller will not have to pay for repairs.
Instead, they can decrease the cost of the sale and sell their property in its current state. The seller will retain property rights to the property, until it has been paid in full.
Owner financing is appealing to sellers and buyers alike. The seller benefits from the sale by saving time and money with the selling process. The buyer benefits because they can purchase a home with less than perfect credit, and for a reasonable amount.