Owner Financing Need-To-Knows

It is a good idea to be fully equipped with a good knowledge base when you are dealing with transactions regarding real estate, so that you have an “in” on all the beneficial options. One such option is Owner Finance. Owner Finance is a popular term that not a lot of people are aware of. This article will give a basic run down on how such a real estate transaction works.

So, what exactly is Owner Finance? Basically, this is a property transaction that foregoes dealing with the banks or lending companies. Instead, the seller finances the transaction, with all the buyer’s repayments going to the seller directly. The seller will take on the purchase price, including the mortgage and all other loans that the property demands – meaning they front the money. In a traditional real estate deal, the seller receives his money at settlement, which usually occurs in 4 to 6 weeks from exchange of contracts.

However, using Owner Finance in a real estate transaction means that the owner will not receive the full purchase price until the end of the term. The owner takes on the role of the loan institution or bank. An Owner Financing deal is actually quite popular with clear and free real estate property.

Once it has been decided that an Owner Finance arrangement will be entered into, both parties will then agree upon the terms of the seller financing loan, the monthly payment plan as well as the interest rate to be paid. There is less risk to either party being ripped off, since all agreements made are legalized by documenting them into the contract.

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Even though Owner Finance may sound too good to be true, especially for the buyer, there are actually fringe benefits for both parties. First of all, for buyers, unlike transactions with banks and loan institutions, there are no application, processing or service fees required to be paid, as the arrangement is done directly between the 2 parties (the seller and the buyer). The seller will be keen to ensure that the buyer can easily afford the full monthly repayments though. Finally, the buyer has an opportunity to get hold of a property much quicker, rather than having to wait years to qualify for bank finance.

For sellers, they can receive their full asking price, losing no money in agent fees or commissions. None of the seller’s hard earned equity will be given away to a real estate agent in fees and commissions, as there is no real estate agent involved in this type of transaction. Sometimes the seller may be able to charge a higher price due to the flexible terms he is providing. The seller may also receive a tax break since he will be declaring a smaller yearly income due to the installments, unlike the lump sum amount received in a traditional sale. The property will not be listed for long. The seller can also charge a higher rate of interest than the banks since the seller’s financing terms have made purchasing a home easier for the buyer. When offering flexible terms of sale, such as Owner Finance, the selling period is abbreviated, no matter what the economy is like, due to the inviting terms provided for a buyer.

Find out the real deal about owner finance as an option for your property acquisition. Make sure you have a reliable source. Check on the link provided for more details.