Posted on: 05th Apr, 2010 12:36 pm
Hi. We are looking into doing an owner finance with the house we are currently renting. Our credit is not perfect so it is difficult for us to purchase outright. We are trying to figure out how to owner finance where we have "legal" claim to the house and are able to re-build our credit by paying the mortgage payments and get a re-finance on the house for repairs. Thank you
randi, if you are paying a private individual on a mortgage, you need to know that the mortgage won't be reported to credit bureaus. that's not necessarily all that bad a thing, because you can still rehabilitate your credit standing with all of your other credit (loan, credit card, etc.). you'd want to keep excellent records of your payments - paying in check and keeping copies of those checks and the corresponding statements would solidify your payment record for a future lender.
beware the hazards of owner financing. if the owner has a mortgage, you are at severe risk, i think. your payments are going to have to be used by that owner to pay the mortgage on the home. if they don't get to that lender, there's a possibility of foreclosure and your position as tenant is jeopardized.
your first step in considering owner financing is to speak with and retain a lawyer who can guide you and provide you with protection. a bond-for-deed, recorded in the appropriate land records, is something that would give you rights that you might not otherwise get. please ask your attorney about the likelihood of doing such a thing. obviously, you'd need a contract for the purchase, with that contract to include the terms of your rental agreement, and what portion of your payments are dedicated to the purchase.
there's risk involved in owner financing, so you need to ensure that you're protected (don't forget homeowner's insurance that the owner needs). do your homework, get protection and then move forward if it makes sense.
beware the hazards of owner financing. if the owner has a mortgage, you are at severe risk, i think. your payments are going to have to be used by that owner to pay the mortgage on the home. if they don't get to that lender, there's a possibility of foreclosure and your position as tenant is jeopardized.
your first step in considering owner financing is to speak with and retain a lawyer who can guide you and provide you with protection. a bond-for-deed, recorded in the appropriate land records, is something that would give you rights that you might not otherwise get. please ask your attorney about the likelihood of doing such a thing. obviously, you'd need a contract for the purchase, with that contract to include the terms of your rental agreement, and what portion of your payments are dedicated to the purchase.
there's risk involved in owner financing, so you need to ensure that you're protected (don't forget homeowner's insurance that the owner needs). do your homework, get protection and then move forward if it makes sense.