Owner Financing

Buyers will often need to consider many options when purchasing a home. Especially investment properties. One item you might want to consider is getting a Seller to hold all or part of the financing of a home you wish to purchase.

Pros
The qualification and paperwork may be much less of a hassle. And, if you are going to have limited cash down, with a traditional lender you will either have to pay a higher interest rate or mortgage insurance. But you might consider getting a bank to loan 80%, an owner to finance 15%, and you put down 5% and pay your own closing costs. Then you would be able to avoid mortgage insurance. Of course you will want to document all of this and make sure that it is a real “owner carryback” and not an attempt to defraud the bank. Yes, it goes on, sadly.

Cons
A Seller willing to hold all or part of financing is going to want top dollar for their property. Yes, they will be earning good interest. But in their mind they will not be completely rid of the responsibility of thinking about that property. Afterall, if you should default they have to chase you down, file liens… Not what they really want to do. So by getting top dollar they get rewarded for some of their risk up front.

For both parties it can be a highly desirable outcome. Just make sure you work it out, all of it in great detail, before moving forward.

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