Posted on: 21st Jul, 2005 03:20 am
Owner financing or carry back loan is useful because:
- It is a good source of income and helps to sell the property quickly as there is no fixed criteria for buying it.
- It becomes a good option when the property can't be financed by any means or when the owner has a lot of equity in his property but may not need the money paid by a lender at the closing of a mortgage.
- The rate of interest offered by a seller can be more reasonable than that offered by any other lender.
- If the prices in your area are high or if the sale price you aim at exceeds the estimated property-value, you can close the sale quickly by financing the entire part or a fraction of the purchase yourself.
- In case a buyer defaults, the deal ends. The seller can then keep whatever down payments and monthly installments the buyer has paid till that period, and sell the home again at its market price to another buyer.
- Since the seller can spread out gain for a long period or postpone all of it, therefore his tax liability is reduced.
Gwen,
Your home should be paid off prior to selling it off through owner financing. What's the difference between the home purchase price and the appraised value?
Your home should be paid off prior to selling it off through owner financing. What's the difference between the home purchase price and the appraised value?
Hey Sara,
I think that you misunderstood the spirit of my question. I am looking at this through the eyes of a investment buyer. It is important to a lot of investors that they never spend their own money nor use their own credit to finance a deal. With that being said, what other upsides do you gain owner financing rather than getting a conventional mortgage?
I think that you misunderstood the spirit of my question. I am looking at this through the eyes of a investment buyer. It is important to a lot of investors that they never spend their own money nor use their own credit to finance a deal. With that being said, what other upsides do you gain owner financing rather than getting a conventional mortgage?
Hi gwen!
Welcome to Forums!
Appraise value and purchase price can't be same for a house. They are more of less closer to each other.
Coming to your second question, it is always better to pay off before you carry back. In case you don't pay back and the lender comes to know then he can take legal actions against you.
Feel free to ask if you have further queries.
Sussane
Welcome to Forums!
Appraise value and purchase price can't be same for a house. They are more of less closer to each other.
Coming to your second question, it is always better to pay off before you carry back. In case you don't pay back and the lender comes to know then he can take legal actions against you.
Feel free to ask if you have further queries.
Sussane
i have my home with mortgage and am needing to sell due to job relocation. i am considering offering owner refinance to potential buyers. looking at the options, i am thinking the deed of trust where they would be given time of 3-5 years to secure their own financing for payoff. what is recommended for down payment, does that have to go to the home or put as earnest money? also, as the seller, what tax advantages, besides the mortgage interest and property taxes do i have? all they would have is the morgage interest they pay to us, right?
i am trying to learn all i can before i get into something here.
dorene
i am trying to learn all i can before i get into something here.
dorene
Hi Dorene!
You and the buyer can decide as to how much down payment you will be taking. You can then decide on the monthly payments and the rate of interest you will be charging the buyer. Owner financing also allows the seller to postpone their tax liabilities. In some cases, owner financing will also reduce their tax liabilities.
Check out the link given below to know more about owner financing:
http://www.mortgagefit.com/owner-financing.html
Thanks,
Jerry
You and the buyer can decide as to how much down payment you will be taking. You can then decide on the monthly payments and the rate of interest you will be charging the buyer. Owner financing also allows the seller to postpone their tax liabilities. In some cases, owner financing will also reduce their tax liabilities.
Check out the link given below to know more about owner financing:
http://www.mortgagefit.com/owner-financing.html
Thanks,
Jerry
My buyer wants to take over payments and house insurance payments and pay the taxes. They want to one day own the home. They agree we need to get an attorney or title company. Is this owner finance? Do we need to ask for a down payment? We owe about 78,000.00 on the home. I am so confused- what should we do??
Lisa
Lisa
Hi Lisa,
When you sell home to a buyer who takes over the payments officially, it is known as mortgage assumption. That is, the buyer takes over the entire responsibility of the mortgage loan and your name is removed from it. But yours is a slightly different scenario.
It's not a case of owner financing wherein a buyer purchases your house and instead of paying you the sale price in lump sum cash makes monthly installments. The entire transaction is drawn up by an attorney mostly in the form of a mortgage. So, if the buyer defaults, you take away your home.
But prior to selling your home to someone, you need to inform your lender. Here the buyer simply wants to take over your mortgage payments. What he wants is, he'll stay at a tenant in your property and pay for your mortgage. After some years, when he has the cash, he'll buy the home.
I hope I could explain the entire situation. If you think there's something missing, just let me know.
Good luck
When you sell home to a buyer who takes over the payments officially, it is known as mortgage assumption. That is, the buyer takes over the entire responsibility of the mortgage loan and your name is removed from it. But yours is a slightly different scenario.
It's not a case of owner financing wherein a buyer purchases your house and instead of paying you the sale price in lump sum cash makes monthly installments. The entire transaction is drawn up by an attorney mostly in the form of a mortgage. So, if the buyer defaults, you take away your home.
But prior to selling your home to someone, you need to inform your lender. Here the buyer simply wants to take over your mortgage payments. What he wants is, he'll stay at a tenant in your property and pay for your mortgage. After some years, when he has the cash, he'll buy the home.
I hope I could explain the entire situation. If you think there's something missing, just let me know.
Good luck
WHO WOULD HANDLE THE PAPER WORK FOR ME?
COULD I HAVE THE BUYER HANDLE ALL CLOSING COSTS?
COULD I HAVE THE BUYER HANDLE ALL CLOSING COSTS?
Hi TONYMAL!
Welcome to forums!
You can contact an attorney. He will handle the paperwork for you and also draft the owner financing agreement for you. Yes, you can have the buyer handle the closing costs.
Sussane
Welcome to forums!
You can contact an attorney. He will handle the paperwork for you and also draft the owner financing agreement for you. Yes, you can have the buyer handle the closing costs.
Sussane
we have in the process of buying a house the owner will carry the house is paid in full thers no loan .....my question is what happen if the seller is the frist on the lien? excuse my spelling my english is not good
While you owner finance the property, you will have to sign an agreement with the seller. This agreement will include the required terms and conditions of the loan. In this case, you would be the borrower whereas the seller will be the lender. As per the agreement, he will be able to take required steps against you if you default the loan.
So, as I understand it, if we ask 50% down(approx 125,000) and carry the balance (approx 125,000), if the buyer takes out a loan for the down and defaults on the loans, the bank that holds the first lien can foreclose and take the whole property? It seems that it would be wise to accept only cash for the down.
What can happen if I carry the loan as a first mortgage, but make it a balloon mortgage to be paid in 15 years.
The buyer will have to refinance the loan after the 15 year period when the balloon becomes due.
I am in the process of buying a house where the road is taking out the houses. This individual bid on the house and bought it. Now he is selling it to me . we signed papers for number xxx dollars to buy the house to put on my vacant lot. After the lot was ready, he called me and said he would put the house on the lot the next day. We had not discussed terms of financing other than they would be doing the financing with my lot as collateral. When he told me how they done their financing I had never heard of this before. He told me then their method of financing was swapping checks. How he told me this works was he would give me a check in the amount of the house . I was then supposed to write him a check for the same amount. I have never heard of a transaction in this manner. Can you explain how this would work? Curious and puzzled!