Question
What are the pros and cons of owner financing from the buyers side?
My husband and I are renting a home for 950.00 per month, we recently found a home with owner financing option. I am just wondering how exactly it works and if our payments would be smaller per month? The home we are looking at is 79000 and we will only have 2000 down. Are the home owners ins. and taxes included in the amount you pay the owner? How do they determine the interest rate if you don't go through a bank?
5 months ago - 1 answers
Best Answer
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This is basically a contract for deed or an installment sale. You pay a certain amount each month for an agreed upon amount of time and then buyer agrees to pass the title over you when the debt is paid. -the property taxes, home owners insurance and all the terms (i.e. interest rate) will be subject to whatever agreement you and the seller come to. Pros: you usually get a better interest rate because they owner/seller will have to discount it some. You don't have to go through a bank, so possible option for those with less than stellar credit ect. Cons: Very Risky You do not receive title to the property and thereby can loose homestead protections ect. Its important to know if the property is owned free and clear or is financed. If the property is financed any "sale" will likely be a breach of the seller's contract with his lender. Also, what happens if seller takes your money but doesn't pay the lender? Moral: you technically don't own the property, and the seller/owner doesn't have any homestead protections either. That means if the seller defaults on his loan or lets say he gets a money judgment against him, his creditors can come attach the property and forclose on your house! You definitely should check with a local lawyer before signing anything or entering into any agreement. The local lawyer can explain how your state's laws effect the contract. Also, this type of sale has been outlawed in many states. Bottom line, DON"T do this type of deal without a lawyer (unless you have plenty of reserve funds for possible atty fees later on)
by Austin_eater
5 months ago
Asker's Rating: 