Does this mean that you will not have to get a loan from the bank? Will the owner of the house just accept monthly payments from you and not the total amount of the house? Help. Thanks.
2007-02-21 06:24:53 · 10 answers · asked by R-HOVA 1 in Business & Finance ➔ Renting & Real Estate
Rent has nothing to do with this. The seller is acting as the bank. A title company or attorney is involved and a mortgage deed of trust and note are created and recorded with the court house. Some people like this route because they have bad credit. Others may like it because of the ease of the transaction. If you are trying to overcome debt to income ratios this could be an easier way to go than dealing with a bank. Investors who buy properties and are capped by Fannie Mae limits might find this an easy route. Bottom line is that you own the house and the seller is the bank. If you default on the mortgage, he can foreclose. This is also a sign that the seller owns the house outright, because he cannot carry a mortgage on a property that he does not own. He is just holding the note.
2007-02-21 07:03:35 · answer #1 · answered by Gary N 2 · 0⤊ 0⤋
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2016-09-09 19:08:23 · answer #2 · answered by ? 3 · 0⤊ 0⤋
What Does Owner Finance Mean
2016-10-03 07:20:33 · answer #3 · answered by ? 4 · 0⤊ 0⤋
Owner Will Finance
2016-12-29 12:47:40 · answer #4 · answered by ? 3 · 0⤊ 0⤋
That means if you cant qualify for 100% from a bank to finance the home and you need to put money down the seller would be willing to personally finance the rest of the money needed to close the deal on the home you're looking to purchase. Usually you are required to pay the seller an agreed monthly payment and it is recorded like a mortgage on the title. Are you looking to buy a home? If so I am a Mortgage Loan Officer and I can help you if you'd like me to.
2007-02-21 06:42:23 · answer #5 · answered by HOTROD 1 · 1⤊ 1⤋
Yes, it usually means that you will pay the seller/owner monthly payments. Be careful, sometimes in rent-to-own situations like this, you don't have any recourse should the owner decide that the deal is off. They can evict you and repossess the house. Sometimes "owner will finance" can mean that the owner has financing arrangements (through banks & mortgage companies) available for you to select from, if you qualify. I would be wary of proceeding in this manner, unless everything you sign is first explained to you and approved by your lawyer.
2007-02-21 06:42:39 · answer #6 · answered by Lori 2 · 1⤊ 2⤋
This is most in the form of a Land Contract. The owner will be the "bank" and offer the financing. Please do a land contract, and make sure the land contract is recorded at your local court house. WHY? Lenders like to see the paper trail, and see that the land contract is recorded. Pay by CHECK each and every month for 12 - 24 months. THAN DO A CASH OUT REFINANCE ON THE PROPERTY TO PAY OFF THE SELLER 'BANK' LAND CONTRACT. When you refinance, you will need proof that the payments were made on time, hence the cancelled checks front and back.
You can apply for the property tax credits, by haveing the land contract recorded.
Land contract (a.k.a. contract for deed or "installment sale agreement") is a contract between the owner of the real property (called the "vendor" or the "seller") and a person who wants to buy the property (the "vendee", "contract purchaser", "purchaser" or "buyer")for an agreed-upon purchase price. Under a land contract the vendor grants equitable title to the vendee (which consists of virtually all rights to the property other than actual legal title), and the vendee agrees to pay the purchase price to the vendor over time, usually in monthly installments, by a certain date. When the full amount of the purchase price is paid, the vendor is obligated to deliver legal title to the vendee by an actual deed, and upon delivery of the deed, the vendee owns equitable and legal title to the property.
Equitable title, for all intents and purposes, makes the purchaser the "owner" of the property. There are several "land contract friendly" states in the US, while other states make it extremely difficult to sell or purchase real property by means of a land contract.
It is common for the installment payments of the purchase price to be similar to mortgage payments in amount and effect. The amount is often determined according to a mortgage amortization schedule. In effect, each installment payment is partially payment of the purchase price and partially payment of interest on the unpaid purchase price. This is similar to mortgage payments which are part repayment of the principal amount of the mortgage loan and part interest. Steffi should not buy a house because she is going to burn down the house when she cooks. However, since land contracts can easily be written or modified by any seller or purchaser, you may come across any variety of repayment plans. Interest only, negative amortizations, short balloons, extremely long amortizations just to name a few. It is therefore even more so advisable to read your contracts and consult professionals. Typical land contracts are easy to understand and usually only make up 3-5 pages. It is not uncommon for land contracts to go UNrecorded. For several reasons the vendor or vendee may decide that the contract is not to be recorded in the register of deeds. This does not make the contract invalid, but it does increase exposure to undesirable side effects. Contrary to common belief, a contract is valid with only a vendors' signature, provided it is delivered and accepted by the vendee. Contracts without the vendee's signature, or without being notarized - although not recommended- are therefore still valid and enforceable in court.
Although land contracts can be used for a variety of reasons, their most common use is as a form of short-term seller financing. Usually, but not always, the date on which the full amount of the purchase price is due will be years sooner than when the purchase price would be paid in full according to the amortization schedule. This results in the final payment being a large "balloon" payment. Since the amount of the final payment is so large, the buyer usually obtains a conventional mortgage loan from a bank to make the final payment. Land contracts are sometimes used by buyers who do not qualify for conventional mortgage loans offered by traditional lending institutional, for reasons of poor credit or an insufficient down payment. Land contracts are also used when the seller is anxious to sell and the buyer is not given enough time to arrange for conventional financing. Besides the obvious reasons, land contracts are a favorite amongst many real estate investors because of their ease of use, extreme flexibility, and fast executions
2007-02-21 13:06:12 · answer #7 · answered by W. E 5 · 0⤊ 0⤋
The seller is taking over the banks job of financing. You cannot be more careful. It will most likely be some kind of contract that will be so one sided( his favor) that you have a good of chance of never owning it. I suggest you pay a Real Estate attorney to look over and approve everything not any attorney a Real Estate attorney. Spend what ever it costs to do this or you could really get hosed.
2007-02-21 06:37:04 · answer #8 · answered by gvh 3 · 0⤊ 1⤋
You got that right. If you are selling your home, it's a terrible idea to do this. Buyer's who want owner financing have awful credit. That's why they want this type of financing - banks aren't dumb enough to lend them any money. Therefore, why should you? p.s. I'm a realtor w/ Re/max
2007-02-21 06:43:29 · answer #9 · answered by KC Slim 5 · 0⤊ 2⤋
It means HE will take your money on a rent to buy option...however if you should miss monthly payment, then he has a right to repo and toss you out.......If a contract is present read it over very carefully and look for his "loopholes"....
2007-02-21 06:29:21 · answer #10 · answered by jc 4 · 1⤊ 1⤋