Owner Financing is very risky, for Buyers & Sellers.
I get approached by a great many people each week who would like to find a property to “Owner Finance.”
Perhaps the Credit Score suffered a hit, due to some unforeseen circumstance, and it has not yet rebounded.
Word to the wise: If you find a property to Owner Finance, most likely the Seller is going to want an astronomical amount of money up front. Far more than a Bank.
There are plenty of loans these days that Offer “Down Payment Assistance,” or even 100% Financing, if you qualify.
It would pay to work on that credit score, your income, & payment history, and get all patched back up, so you can qualify with a Bank. It might be worth the wait!
Because……the giant sum of money that Seller wants up front? It is NON-REFUNDABLE. No matter what, it’s lost. Gone. Wasted. Forever.
It’s a huge risk, and I’ve seen people suffer another unforeseen event, that caused them to default, and they lost a ton of money on the Home they “Owner Financed.”
Not only did they lose all the money they paid from day one, but the Owner took the Property back as well.
Unless you can guarantee you will never lose your job, a death in the family will never prevent you from paying, or a sickness or injury could never prevent you from working, I wouldn’t recommend doing it.
What happens if you die tragically, who then is left behind, that could pay that debt?
Sellers Owner Finance for a much higher Interest Rate typically, making your payment much higher.
They don’t Escrow your Taxes & Insurance into the Payment most often, so that is 2 extra bills you will face.
As a Seller, it’s also enormously risky.
There is probably not enough money you can collect up front, though non-refundable to the Buyer, that can make up for a ton of possible damage, if the home is destroyed.
Also, if you have a Mortgage on the house, it is possible you will be violating the Terms of your Mortgage to have someone take over the payments. That’s a question you should ask your Attorney.
There is a lot to consider on both the part of a Buyer & Seller before committing to an “Owner Finance Transaction.”
If you have Real Estate Questions, give me a call!
Donna Hughes is Your Triad Realtor! 336-953-5462