What You Should Know about Owner Financing

When you are looking to buy a home, you are bound to come across owner financing. Owner financing, sometimes called seller financing, may seem like the perfect solution, but it can be more difficult to get this kind of financing than it may seem at first glance. The seller who is offering owner financing may not be willing to extend the financing to you and there is always the chance that you will have to prove that you are worth taking the risk for.


Owner financing means that the owner of the home you are interested in buying will extend financing to you. It is best if you can find an owner who either has no mortgage or who has a great deal of equity, because they will feel a bit more comfortable offering you financing. Many sellers do not have the funds to offer you financing upfront, and will need to get that money from a bank. This can be a real problem if you have been unable to get financing through a bank, because the seller may see you as a high risk and be unwilling to take out a loan to offer you financing.


Sellers are offering owner financing to help entice potential buyers. With tighter rules and regulations, many buyers are finding that they are unable to qualify for loans. Owner financing can help both buyers and sellers get the results they want, but this kind of financing is not without its risks. For the seller, the buyer may not be reliable, and the seller could end up with a loan and home they do not want. The buyer may not be able to get the kind of home they want, and could run the risk of getting into too much debt because it may be easier to get more house than they actually need.


One of the biggest benefits of owner financing is the fact that you may be able to negotiate a much lower interest rate than you would get if you went through a traditional bank. You can also save a great deal of money if you use owner financing. With a traditional loan you will have to pay closing costs and many fees but you will not have to pay these with owner financing. You can save hundreds or even thousands of dollars with this method of buying a home.


Many sellers will require a large down payment when you use owner financing. You may also need to prove that you have a steady income and explain why you have any credit problems. Many sellers are more willing to work with a buyer than banks are, but you will need to convince the seller that you can be relied on. You may be required to get a co-signer and should always remember to only get what you know you will be able to afford.

Leave a Reply

Your email address will not be published. Required fields are marked *