Owner Financing Advantages
Owner financing deals are usually offered by owners who owe little to nothing on their homes. They are content to wait for full payment. They also earn a better return on their money than is currently offered by financial institutions. They also have the advantage of spreading out capital gains tax over time.
Home buyers also have advantages in purchasing a home with owner financing. Typically, they will save on various bank fees associated with loans. Terms can be negotiated with the owner that may not be possible with lending institutions. Buyers with poor credit may be able to benefit from owner financing by making timely payments. Some owners may be willing to lend to higher risk buyers for the higher return on their asset.
Owner Financing Disadvantages
One disadvantage for sellers is the risk of the buyer defaulting on the loan. If the down payment plus monthly payments are not more than the depreciation of the house the seller could actually be losing value on the home. This assumes the value of the home stays level. The seller could also lose if he sold in an appreciating market.
Disadvantages for buyers include higher interest costs than current lending rates and the need to refinance the loan if a balloon payment is agreed to at the end of the term.
How To Find Homes For Sale With Owner Financing
Owner financing opportunities are rare but do exist. This website offers two ways to search for listings that advertise owner financing. Listings are advertised in the MLS system as “owner financing” or “seller financing”. Thus we’ve provided two separate links. Once you’ve found a home you are interested in call any of our agents above for assistance.
