What Is Owner Financing?

With owner financing, instead of the buyer seeking a loan from a bank or credit union to purchase a property from the seller, the seller assumes the position of being the lender by extending their own capital and financing to the buyer for the purchase price of the property, minus the down payment required. The buyer and seller mutually agree upon the terms and conditions of the loan (i.e., interest rate, length of the loan, prepayment penalties, down payment, who pays property taxes and insurance).  These agreed upon owner finance terms are then incorporated into a promissory note (which outlines the buyers promise to repay the loan at the agreed upon terms), and a deed of trust (which provides the seller with recourse if the buyer fails to repay the loan).

What Are The Benefits Of Owner Financing?

Below is a list of the benefits that are associated with owner financing:

*Lending Flexibility:  With our owner financing, we are able to be more flexible with whom we can approve to receive financing from us.  In this regard, we have the ability to approve individuals that may not have good credit by traditional standards, a higher debt to income ratio, a shortened work history, etc.  In this regard, we can approve our offered owner financing for individuals whom may not qualify for a loan through a traditional bank or credit union.

*Faster Closings:  While traditional loans involving banks and credit unions can take over 30 days to close, transactions involving owner financing typically close within 5-10 days.

*Cheaper Closings:  While banks and credit unions tack on additional bank fees, appraisal expenses and other related costs, owner financed deals do not incorporate such fees, resulting in lower closing costs.