Owner Financing

Owner Financing questions and answers

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Q: owner financing?
Does anyone know of any websites that have houses for sale by owner financing? Or even rent to own?

A: Hello, You can always make an offer for a property and put seller financing as one of the terms. If you are working with a Realtor, s/he will help you with making an offer that will help you get a property. A seller financed home is no different from just selling a home, it is just a part of the terms and conditions. Send me an email if you need any more information. Best regards.

Q: What are the differences between owner financing and rent with the option to buy?
we have a chance to purchase a house with owner financing but are being told that we have to notify them of any major improvements on the property....that sounds more like renting with the option to buy to me....can you please clarify the laws pertaining to this?

A: they are about the same but I can understand why he wants to be told of renovations as many start out doing well but most never complete a owner financing plan. If you do this then do it for a couple of years at most then get bank financing through Fannie or FHA and they will do this as a refinance and always pay on time and by CHECK ONLY as you will need proof of timely payments an a landlords word is not good enough

Q: How does someone do Owner Financing on a house?
I am looking to sell my house and offer owner financing to open up for more potential buyers and an increased sales price. I need to know what paperwork I need to do to complete the transaction. Do I need to notify my current lender? Should I consult an "expert" or is this something I can do myself? I rather not pay someone if it is just a matter of doing the leg work... Any help would be appreciated since I have searched all over the internet and have been unable to find the answers I need.

A: It may be possible to do it yourself if you're just trying to put a 2nd on, leaving the property in your name [and ultimate responsibility for the current loan], but you're playing with fire regardless. If you're in a 'deed of trust' state [rather than a 'mortgage' state], you should definitely contact an atty. Basically you would need a security instrument [either a mortgage note or deed of trust] and a promissory note [the repayment terms]. You'll need a warranty deed to convey the property if you're truly selling it--the title company may be able to help with the deed. Often, these forms can be obtained at 'old time' office supply stores, but completing them correctly is something else. However, your current mortgage probably has a 'due on sale' clause if you're doing a complete sale, which means that when ownership is transferred, the lender expects to be paid in full. The accounting [the payment split between principal and interest] changes with each payment, so it could be an accounting nightmare if mishandled. So you can see, there are a lot of technicalities here. I haven't even gotten into 'title work,' which the buyer may rightly be expecting, IF you're doing a real sale. You might want to consider a lease-option, which leaves you in ownership while the buyer makes monthly payments to you [and adding to the downpayment over time].

Q: Anyone willing to do owner financing on a Yamaha R6 or any Street bike?
I've been looking around for what feels like forever and a day. Im 19 and need a bike for college. So anyone in Houston TX that will do owner financing is makin a dream come true. Willing to give all numbers at collateral...DL. License plate number to my truck. Everything!

A: JJ Motorcycle & Auto sales on Airline Check back ill give you his phone # Small Down weekly payments If you look it up and call your self tell him Indian John told you about him

Q: Where should I look for an owner financing option as a buyer?
I am ready to buy and make 150,000 payment on a house. My credit is bad, should I look for an owner financing option as a buyer? What are my options?

A: This is a searchable field in the MLS, an agent can give you a list of owners willing to carry paper.

Q: Who pays for the home insurance when you are owner financing it? Also in the state of Texas what insurance c?
Who pays for the home insurance when you are owner financing it? The seller or the buyer? Also in the state of Texas what insurance companies provide mobile home insurance?

A: Who's name is on the title, at the registrar of deeds? Until the title is passed to the buyer, the house is just a RENTAL, and needs to be insured that way. If this is a land contract, the SELLER should keep the policy to 1. make sure it gets paid and 2. make sure they have coverage in place, should the contract revert to rental. The buyer should THEN carry a renters insurance policy. If the deed is being transferred immediately, then the BUYER gets the policy. Then the seller just has to hope that the policy gets paid. Most of the time, owner financing is more hassle than it's worth. If the person isn't credit worthy enough to secure a mortgage on their own, they're most likely going to default on YOUR mortgage, also. Then, depending on the condition of the property, you're left with something basically unsellable. For mobile home insurance, find an agent that represents Foremost INsurance - www.foremost.com. If the home is more than 20 years old, it's uninsurable. After 20 years, they depreciate to nothing.

Q: Where can I find free printable owner financing contracts?
We are selling our house by owner financing. We need a contract for this. I was hoping someone would know of a website that had free printable contracts. Or even a site that may have demo contracts so we would have an idea of what to put or how to word the contract.

A: I could direct you to some website however it all depends on your state. The documents you need will be state specific. For it to be done properly. You will need a Deed, Note and Recordable Security Instrument (Deed of Trust or Mortgage depending on your state) Doing these items yourself would not be recommended. I would suggest contacting a local title co and they will be able to provide and prepare the necessary documents needed for this transaction.

Q: owner financing a good option for bad credit?
Is owner financing really a good option for those with bad credit? What are the typical qualifying terms in these cases? Is documentation usually required? What's the best way to structure the deal, in the buyer's favor? If you have any tips or insights, please share.

A: Owner financing is a great option for bad credit. Especially during times like these when traditional credit is tightening up. There are many ways to structure the deals. Sometimes a portion of the rent goes towards the down payment for about 3-5 years. At that time the credit will (hopefully) be better, and the "renter can get a traditional loan." There is also a "nest egg" to put towards the down payment. There is also a method called the "wrap-around" mortgage. For example, the seller sells you the property for $100,000, on a 30-year term. He owes $50,000. You pay him $1000 per month. He pays the mortage company $500 and keeps the other $500. When you pay off the mortgage you own the home. When structuring these kinds of deals, make sure that it is clearly stated that this is a "Purchase" and not a "rent to own." Ideally you should have a recorded deed, but be careful with that because once a deed is recorded the lender might have the option to "call" the entire loan balance due. If the deal is structured in your favor, the sales price is locked in and the seller can't change it. Make sure that you have the right to sell the property as long as you pay off whatever price you agreed upon. In my example above -- if the property is worth $120,000 after 3 years, you would have the right to pay off the entire $100,000 and keep $20,000 for yourself. Above all, please consult an attorney to look after your interest.

Q: how does owner financing work in texas?
I really would like to purchase a house, however I have limited credit and fear I would not pass for a mortgage at a bank or any financial institution. Reason being is that I have not been at my job long and once again, I do have limited credit, I would rather not even bother to try a bank for fear of rejection. I am only 22 years old and only have about $1000.00 for a downpayment, can anyone please explain to me how owner financing works?? is there a balloon payment at the end of the term you agree on??? any responses would be greatly appreciated.

A: owner will aloow you to make payments on house rather then have you bother with going to bank and trying to get loan and paying owner in full. most owners are pretty basic and easy to work with...a hell of alot better then lenders...each owner may have their own criteria's you have to meet so it is best to ask them what the payment plan entails.

Q: Can someone explain to me what owner financing is?
Can someone explain to me what owner financing is? Please provide examples, with numbers. I get confused when % and this "balloon" thing is mentioned.

A: If you are referring to buying property, then "owner financing" means you only pay part of the money to the current owner of the property up front. For the rest of the amount, you work out a payment plan, which essentially means that you are borrowing the rest of the money from the owner, instead of the bank. Owner financing can be good when the bank won't lend you or when the owner gives you a better deal. When evaluating the deal, consider both the property price and cash flow.

Q: Is it possible to do a 1031 exchange on a property which I plan to sell with lease-option / owner financing?
I have a property/home in which I am putting on the market. If I sell the property on a lease-option to buy or owner financing, would I still be able to do a 1031 exchange? If so, then how and when (upon signing the contract or pay-off (2 years))? Please include details in your answer. I can also add details if more info is needed to the question.

A: I believe 1031 status takes effect when the 1031 trustee recieves the proceeds.

Q: What are the pros and cons of 100% Owner Financing?
Is it the same as a 30 yr fixed rate home loan? Is the interest rate usually higher? There is a house I am interested in but I dont want to call and be an idiot not knowing how Owner Financing works?

A: Owner financing means the owner is carrying the mortgage. You won't get a deed to the property until you have paid off the property completely (i.e. financed with a bank, or won the lottery). The owners normally finance you at subprime interest rates (since if you had great credit you could probably get financing on your own). The contracts normally go for 1 year. I would be smart and ask for at least a 2 year contract. The reason why - when you pay your payments on time, you are building credit history. A bank is more likely to finance you if they see that you were on time or EARLY (early is better) for your owner financing payments. A 2 year contract (or longer) will just build up more credit history, and it should build up more of a down payment. Talk to the owner about prepayment penalties - ideally you should be paying $100 or more OVER the monthly payments to lower the amount of money you have to finance. This will also help you when it comes time to refinance. Remember - you should be LIVING at no more than 65% of your income, so buy accordingly. One major reason why there are so many foreclosures today is because people were buying more house then they could afford. And put money away - you should have AT LEAST 6 months of living expenses stashed away in a savings account. This will also help you when it is time to refinance. Finally, if your credit is really bad - consult with a credit repair specialist. Often times you can find them in the real estate sections of your local newspaper. They shouldn't cost more than $300-$400, and can greatly increase your credit score. This should be done while you are in the midst of the owner financing contract (or at least 3-4 months before you plan to finance a home). P.S. Be sure to protect yourself. Besides always wearing a condom, make sure you have a property manager or set up an escrow account for your monthly payments. Ensure that your payments go to the monthly mortgage, insurance, and taxes first - and to the homeowner last. This way if he goes belly up, the mortgage on your home won't. And keep copies of the contract and records!

Q: What are the tax implications of selling a house and owner financing it?
I want to buy a house from my grandfather but I want him to owner finance it for me. I want to know what the tax implications would be for him such as capital gains tax or tax on the interest of the note he would be holding

A: if it's his personal residence and he's lived in it 2 out of the past 5 years, he can sell it to you for up to a $250,000 gain if single and $500,000 gain if married, and pay no capital gains tax on the gain. As far as the interest on the note, that would be interest income to him, and be taxable to him, and you would get the mortgage interest deduction on Schedule A - Itemized Deductions. If it's not his personal residence, then he would owe taxes on the gain on the sale, but since you would be paying him over time, he could treat the sale of the house to you as an installment sale, and spread the gain, and corresponding taxes out over time.

Q: what are my rights when it comes to owner financing? Can the owner fix all the repairs before we buy? HELP?
We moved into a rental home in February of this year. The owner has decided to sell the house. We have the option to buy the house from him. "OWNER FINANCING" What are my rights? The house has some repairs that need to be seen too, but I'm not sure what my rights are in this situation. We are seriously thinking about buying. I really could use some guidance. Can anyone with experience in this field share some advice. Thank you. Before we buy the house we are renting, can we get the owner to fix all the repairs? We have no problems fixing all of them, but for the price he's asking should we have the owner fix them for us before we sign paper?

A: You should talk to the owner and see if he will give you a discount to do the repairs yourself, then get and estimate for what it would cost him, and have him deduct it from the price he is asking. If he doesn't agree then look for another house, if he wants to sell it he will agree to the repair's being done by you !

Q: How could I structure owner financing on this deal.?
I may be getting a property under contract very soon for the deed. If I do, then I have the option to do owner financing. I don't really understand how to structure owner financing deals which is holding me back from trying to get the deed versus doing a regular lease option. How would I structure a deal like that based on these numberers: The original seller will sell for way the owe: $188,000. Mtg. Payment: $1207 per month Home is worth $235,000. If I found a tenant buyer How could I structure owner financing. I know I'm probably missing some information, so let me know and I'll add it. I know people do this everyday. Also, Is an owner financing deal a more committed version of a regular lease option deal?

A: I can go into all the details about buyer financing but I rather give you this. http://www.byowner.com/data/SRES_booklet.pdf All I can say is be careful and make sure people will pay, if you are not sure put it certain rules in the contract that will legally protect you in case borrower doesn't pay. You can make stricter rules but in return you have to sacrifice some income, for example lower interest rate.