Getting bank approval for a housing loan is not as easy as it used to be. This is not good news for sellers or buyers. To provide alternative means of finance to get the real estate market going again, real estate listing sites such as Easy Road Home provide sellers with a venue for offering owner financing to cut right through the red tape of conventional mortgages.
There are benefits to buyers and sellers in owner financing. Sellers are subject to less rigid standards and are open to negotiating terms with buyers with less than stellar credit scores. Under the flexibility of owner financing, the seller and buyer can agree to terms that is doable for the buyer such as escalating payments as the financial situation of the buyer improves. The down payment is also no carved in stone, so the buyer can negotiate for a lower down payment in exchange for a higher monthly payments, shorter payment terms, or periodic lump sums to make the down payment more manageable. And the best thing of all is that because the processing of owner financing is usually much faster than conventional bank loans, the buyer can take possession much earlier.
For sellers, the main benefit of owner financing is faster turnaround and higher prices. More buyers qualify for owner financing, so the chances of selling a house is much higher than if only conventional financing is possible. And because some buyers have no other recourse than owner financing, or are not willing to wait to get possession, sellers can demand full list price, or higher interest rates, or both. Sellers may also benefit from tax breaks since only a portion of the sale is reported as income for each year rather than the entire purchase price. Sellers are also better able to manage the sale proceeds because it comes in installments, so it lasts much longer and prevents impulse purchases.
Owner financing sounds simple, but it is always best to consult with a professional before committing to such a major investment. Have a real estate lawyer go over the agreement and get advice on what needs to be changed.Read More