what is the best way to do owner financeing?

Question

any suggestions or legal advice for me. I am thinking on selling my home and doin owner finance. It seem like a no brainer, why let the bank make all the interest when I could. however I understand it is rare? so is there something I do not know. ?

Answer 1

You will record a note and deed of trust. The deed of trust secures your interest as a senior lien holder against the property. The note is the financing instrument that spells out the payment schedule and remedies against default. I can send you a promissory note to use for the financing part and a sample deed of trust to examine if you e mail me for them.
You will not use the one I send you but will have escrow prepare the legal one for you. You can use the one I send as a template for them to follow your requierments from. They will of course also need a sale agreement that I can also send you. This is not rocket science but reading the forms that will be used ahead of time does help a person to better understand them. Make sure you and the buyers understand all terms and conditions before signing anything. A real estate attorney or escrow company can close your deal for you. I agree with you regarding banks making all the money and more sellers should offer financing if they can. Your property must be free and clear to offer complete seller financing. The buyers searching for such deals are often credit challenged so many sellers have not offered it the last 8 or so years. Interest rates and easy qualifying programs have placed many buyers into traditional financing also. Make sure you review the buyers credit and refuse financing to anyone with a bankruptcy or foreclosure in their recent past. You do not want to have to foreclose on a deadbeat that knows how to work the system. Make your note a fixed rate 30 year with a stiff 5 year prepay. That will scare away the flippers and most scammers.

Answer 2

I don't know about a house, but with a car I would keep a lien on the title, and then you may wish to familiarize yourself in advance with collections and legal procedures in case of default.

Chances are you won't need to use the information for collections, but fail to find out and someone will test you lol.

Probably your county's property assessment division has more information as well, or someone along those departments.

Then you need to find fair market value, and advertise it.
The bit with the payments ought be easy, but you might want to research loan contracts and I think you'll need to draw one up.

Last but not least, I hope you can read people so you can pre-screen potential buyers, for you may sorely miss the fact that you can not pull someone's credit record, however, a solid pre-screening system can be as effective.

I personally wouldn't do it, despite what I just wrote, peace of mind is worth the banking fees to me.

Answer 3

I suggest if you do owner finance, sell your note for a lump sum of cash to an investor. It will be discounted but at least you will get your cash up front and you can use that cash for other investments.