Owner Financing Homes-whats In It For You?
Benefits for the seller
Most of us want to pay as little tax as legally possible and getting a large sum of cash at closing requires us to pay a hefty tax bill either then or ultimately come tax time. Sellers can pay a much smaller amount of taxes by selling via owner finance or seller financing than if the seller went the usual all cash sale route.
Highest Price. A seller can most often receive the highest price when offering owner financing. Buyers are almost always willing to pay more for easy qualify owner or seller type financing.
Seller Financing. Because owner financing or seller finance terms are offered the chance of a sale increases dramatically since more people will be able to get the financing and can legitimately pursue the home purchase.
Fast Closing. You can close quickly as no bank financing is involved. Some financing can take months to get completed but an owner finance sale can usually close as soon as the title work is ready and inspections (if any) have been completed.
A seller can save the Broker fee or commission from selling via owner finance as well.
There are significant benefits for the seller but there are benefits for the buyer as well. Please see below.
Benefits for the buyer
Buyer can purchase a home now rather than waiting months or even years to qualify for traditional bank financing.
Easy Qualify. There is usually no credit check and very easy owner financing with minimal if any qualifying. Usually just a down payment and the first months payment are required.
Improve credit. An owner finance sale gives the buyer time to improve their credit rating by owning a home and making timely payments.
Lower Loan Costs. Another benefit for the buyer is lower financing or closing costs associated with conventional loans. Points, origination fees, underwriting charges, credit reports, etc charged by conventional lenders can amount to thousands of dollars at closing. The buyer usually does not have these expenses on a seller finance type sale.
Quick Closing. A buyer can commonly close and move into their new home quickly usually within several days of signing a contract since there are no banks involved. If you choose owner finance as the way to purchase your next home or to sell your house be smart and always engage the services of a competent real estate attorney before you owner finance!
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