When in search for a home to buy, confusions and sometimes complications seemingly arise out of nowhere. The trouble that you need to go through such as your credit score, finances, paperwork and the home seller can be quite tiring. The process of going through home ownership as well as all the legal proceedings involved can be stressful and most of all, time-consuming. However, in the recent years this issue has been solved. By selling a house that is owner financed, more and more home buyers are willing to purchase a property for permanent residency than renting a house.
Owner financed homes are constantly under debate by various real estate investors as well as people in the financial sector. For the last 5 years, the result of buying and selling an owner financed property is 50-50. Some says it is beneficial to them while others believe that this is not the right way to sell real estate properties.
To understand it clearly, a house that is financed by the owner means that for instances when the buying party is not able to meet the requirements for filing housing assistance help or when the buyer gets turned down, the home owner funds either the remainder of the amount or the total amount. The payment process is done by the buyer making monthly down payments as form of repayment for the seller at an amount that is agreed by both parties. The repayment sum is usually more expensive and interest rates are higher as compared to paying in a bank or lending company.
A Point By Point Analysis
In order to determine whether an owner financed home is a positive move, here are some factors pointed out.
On A Seller’s Perspective
When selling a house, the home owner is not guaranteed of a sale within the next few weeks or months. For some, it can even take up years to sell their house. Since the real estate market is very competitive and a lot of home owners directly seek out the help of agents and brokers, the possibility of selling their home declines at a fast rate. That is why; sellers are now practicing the owner financed home in order to catch attention or more individuals by luring more possible home buyers to acquire a home and make home ownership a fast procedure. This makes the house stand out from the rest, so what was once a hard to sell residence is now coveted.
The home seller is now the banker under this form of property selling, so you get to gain the right of taking charge that pertains to all the process needed under owner financed homes. You hold the note for the homeloan so you can sell to buyers at a faster time.
Once a house is considered as owner supported, you gain a stable monthly income since the present home owners will pay you monthly installments for the financing you did. You increase your cash flow and spend it for more promising investments. An increase in interest rate is also generated by financing one’s house. You also get to ask for a higher selling price since you personally finance it. Plus, you only have to report income in the calendar year.
On A Buyer’s Viewpoint
An owner financed house means that the buyer can gain rights at a more convenient time. A buyer’s credit standing is not necessarily a prerequisite as long as the buyer can pay on the dot. Another great advantage for buyers is that they can do price negotiations more easily. This is a favorite by many due to fiscal constraints. Making a lump sum payment in order to meet the monthly down payment is allowed.
With owner financed homes, funding the property is more flexible for both buyer and seller due to various available payment types. The two parties can agree whether they are more keen on balloon (advance), interest only or fixed rate (a monthly payment that can allow 10 to 30 years time-frame) payment.
In addition, note buying is also considered when both sides wish to have a financing firm to settle the payments. Because of the free-flowing variations in payment, both home buyer and seller gain benefits. To close it; owner financed homes are a smart move for sellers. Not only does it give positive outcome to the seller but to the buyer as well, making it a give and take relationship.