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What Is Owner Financing?
Also Called "Seller Financing" of "Seller Carry", Owner Financing is simply where you buy the property from us under a private contract, and we finance you as a bank would.
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Depending on the State the property is in; the arrangement is called a Wrap, an AITD, a Contract for Deed, or a Land Contract.
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If you have a 10% to 15% down payment, you can get full ownership and move-in within the next 7 days, all without going through qualifying and loan approval process.
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You will have a standard payment amortized over 15 or 30 years, with all common rights and privileges. However, unlike banks we are not in business of providing permanent financing, so we can finance you only for a short term, to help you jump from renting into homeownership.
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As said, the payment would be based on a 30 year amortization schedule, but Owner Financing arrangement would be for 1-6 years. At the end of that term you will have to obtain a replacement loan from a traditional lender. And again at that point you would go for a "refinancing" loan, which should be easier & less costly to get than a "new purchase" loan, assuming you kept your credit straight and made payments on time.
Owner Financing Advantages
You Take The Ownership Immediately
You get to enjoy all the financial benefits such as mortgage loan interest deduction, property tax deduction, mortgage balance paydown, etc. Since it is YOUR house, you can refinance it or sell it at any time during the contract.
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Better Interest Rate & Terms
LOWER INTEREST RATE - with our OWNER FINANCING program, the interest rates are 7 - 9%, which is much lower than rates charged by B and C lenders. (Keep in mind the interest rates advertised on TV (3% or 5%) are only for A++ borrowers, with perfect credit).
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LOWER CLOSING COSTS - you would be saving thousands of dollars on closing costs. The B and C lenders charge a few points and other docs/origination fees, so you can expect to waste $4,000 to $6,000 in closing costs and loan fees. Closing costs with our Owner Financing are as low as $400 to $600.
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NO PREPAYMENT PENALTY - most of the homes offered on this website are offered without any prepayment penalties built in. This allows you to refinance at ANY time, and lock in the best possible rate you can find for yourself.
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Profit From Appreciation
Any increase in value (appreciation) is your profit. That profit is TAX FREE (Exclusion Rule for Gain on Sale of Principal Residence - tax law). The home prices are going up, so potential to profit over the next few years is excellent. If you just continue leasing where you are right now, you will likely discover that a year or two from today you will have to pay 10%-15% higher price for the same house you wanted to buy now.
What If I Have 15% Or More To Put Down?
The higher down payment you have, the lower your monthly payment will be. Plus, you can receive a lower interest rate.
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What If I Don’t Have 10% Down Payment?
If you don't have a large down payment you may still take advantage of our Lease Purchase plan.
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What Is The Difference Between The Owner Financing Plan And The Lease Purchase Plan?
With the Lease Purchase plan, you are still a Tenant who has the Option, or an exclusive right to Buy a house within a specific period of time, typically during your Lease term. You have the benefits of possession and a guaranteed pre-agreed upon price of the home you will eventually own. But you don't have financial benefits, such as mortgage loan interest deduction, property tax deduction, mortgage balance paydown, etc.
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With Non-Qualifying Owner Financing, you actually own a house and are entitled to all financial benefits of ownership, which may easily amount to over $10,000 per year in cash back from IRS.
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What Closing Costs, Fees and Points Shall I Expect To Pay?
Your share of closing costs is $400 to $600 for the Owner Financing program, and you would pay them directly to the closing attorney.
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In most cases we don't charge any points or fees on 1-year agreements. If your agreement has to roll over to the 2nd year, there may be financing fees charged at that time. Typically they are rolled into the loan, and not paid out of pocket. If applicable, these fees are discussed with you and stipulated in the original financing agreement before you buy the house.
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Also, you will need to pay for the 1st year insurance premium to have the home insured against damages.
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As you can see, your total closing costs are a few hundred dollars, so you're not wasting thousands of dollars like in a traditional purchase.
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How Quickly Can I Get Approved For And Move Into The House?
Typically within 1-2 business days.
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Do You Do A Credit Check And What Happens If I Have A Bankruptcy Or Credit Problems?
Yes, a credit check is done in most cases. But things like bankruptcies, collections, being turned down for a bank loan or other credit problems are no concern to us in regard to getting you in one of our homes. We want to be familiar with your credit issues so we can better guide you to repairing your credit.
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If the credit is extremely bad, you can still get approved but we won’t be able to be flexible on your down payment, or in some cases we may require you to pay a slightly larger down payment.
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What Happens If I Don't Qualify For A Bank Loan At The End Of The Term?
If, during the term of the agreement, you were late on your payments, or other credit accounts, if you incurred additional debt, or jeopardized your loan in some other way, obviously, you were not making a serious effort to get ready for the purchase. Therefore, we won't give you a second chance.
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If, however, you were on time and did everything you could, but still could not get financing, we will give you another opportunity. Sometimes extending is not an option due to the type of financing we have on that property.