Therapy Business and Finance

How To Owner Finance Your Home

You’ve seen the real estate ads in the classifieds section of the newspaper: “Owner Financing Available” or “Owner Will Carry”. An owner financed real estate transaction enables the buyer of the property to make payments directly to the seller.

This grants the buyer to purchase the real estate without having to apply for a mortgage from a bank or financial institution. The seller also has the option of selling the loan to an investor for cash.

Of course, there are lots of variables that work into a price offer including type of property, location, age of house, equity, is the buyer making the monthly payments, etc. These are just some of the things an investor likes to see. Investors purchase all sorts of real estate notes and deeds of trust. Each home is different, each loan is different and each deal is different. Use the above list to make the loan more captivating to an investor.

ADVANTAGES OF OWNER FINANCING THE SALE

Sell Your Property For Your Desired Asking Price
A buyer might be perfectly happy to pay market value (and maybe more) for a home that requires a smaller down payment and that a bank won\’t help them finance.

Charge a Higher Interest Rate Than a Bank Would Give
By charging a higher interest rate than a bank (say 7. 5 – 8. 5%) you are, in effect, increasing the overall income price of the property, and making the note more captivating for an investor.

Faster Sell
You can sell a home with owner financing a lot quicker than with bank financing and there can be tax advantages in spreading the buyer’s payments out over time (talk with an accountant about that).

Great Monthly Cash Flow Investment
Many owners simply like the intent that they can receive a monthly income and a high interest rate from a property even after they have sold it – and no longer have to worry about repairing leaky roofs or replacing dead water heaters.

Sell The Note To An Investor
A seller who owner financed the deal also has the option of selling that note to an investor for cash either right after closing or after inactivity a number of months or years (give me a call or email and I can get you more information about selling your note).

DISADVANTAGES OF OWNER FINANCING THE SALE

Cash At Sale = Small Down Payment
Seller receives only a small or even no down payment.

Buyer Won’t Pay
The seller takes the risk that the buyer will not make payments and will have to be foreclosed on. (Forte Properties uses a loan sevicing company to act as an intermediary when selling Owner Financed homes in Austin Texas. )

Due-On-Sale Clause
If I owner finance my home won’t I activate the Due-On-Sale Clause in my mortgage and if I’m only getting a small down payment and monthly installments how will I pay the bank loan back?

The Due-on-Sale Clause is a supplying in a mortgage or deed of trust that grants the lender to demand immediate payment of the equilibrise of the mortgage if the mortgage holder sells the home. It is probably the most talked about, feared and misunderstood topic in real estate.

You can also do a simultaneous closing, where a few days after the close of the home with the buyer you receive a check for the note from an investor.

If you’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the whole process and you don\’t have to begin over again 6 months later with another appraisal, inspection, credit check, etc.

REAL ESTATE PROFESSIONALS – Providing owner financing could mean the difference in having your client sell their home swiftly or having it sit on the market for months, years or not selling it at all.

Asking a seller to offer owner financing to purchase their home can be a tricky proposition. Sellers often reject the recommendation of owner financing because nobody has explained the benefits or proposed owner financing as a way to sell the home. Most sellers’ knowledge is limited to traditional bank mortgages.

http://www. GreatHomesTexas. com – Austin Owner Finance Specialists