What does “Owner Financing” mean?
Reader Question: Exactly what does it mean with an ad for a house says “owner will finance”? This is commonly referred to as owner financing or seller financing. It means the homeowner / seller will allow you to make mortgage payments directly to them. So instead of getting a mortgage loan and paying the seller in one lump sum, you would make monthly payments directly to the seller. The deed does not get transferred from the owner to the buyer until the house has been paid for in full. Owner financing generally appeals to home buyers who (A) cannot qualify for a mortgage loan with a good interest rate, (B) cannot afford a down payment, or (C) a combination of these factors. In other words, it’s typically a last resort for buyers. I’ve seen an increase in the number of seller-financing scenarios lately. It has a lot to do with the economy. Many home buyers are unable to get loans through a traditional mortgage lender right now, so a lot of sellers are offering owner financing to potenti
Top… Owner financing means that the Seller become the bank. Instead of a bank loaning you the money, the Seller does. You give the Seller a Mortgage and a Note to secure the loan. Usually it is on the property being sold. The terms of financing can be: • for any length of time, • at a variable or fixed rate of interest, • can have a balloon payment.Payments are usually monthly, sometimes annually. There may also a “penalty for prepayment” clause or a “no penalty for prepayment clause”. The Note will contain other standard clauses, as well. What “Owner Financing” DOES NOT MEAN: That a campground can be purchased with No Money Down and the Owner will finance 100% of the Selling Price.
