by Jeff
15. July 2011
If you ever wondered the possibility of buying a house or a property through a loan then owner finance is just what you need. With this option, you get to move into the house of your preference faster, as down payment and deposit are often waived and depending on the terms agreed upon with the seller, repayments may be significantly lower as well. Do take note though that there may be interest rates assessed by the seller on the repayments so as to lessen the risk of unfulfilled payments.
Owner finance is when the seller of a property decides to shoulder some or all of the cost of the property similar to loaning the property to the buyer. The buyer would then make the repayments to the owner through fixed intervals and depending on the terms would have interest payments as well. At times, owner financing deals would require the buyer to deposit payments toward an escrow account with a “quit claim” wherein this places the buyer in a position that if ever any payments are late or missed all payments made and including the property are automatically repossessed by the seller. This puts a risk in part of the buyer and maintains a motivation to never miss any repayments.
There are major advantages for the seller in deals like this. For one, property owners like the idea of monthly income coming from the weekly repayments. Likewise, sellers get to have lower taxes because the amount is spread through the repayments, instead of a big bulk that’s taxed in full. And of course, a major headache a seller worries about would be repairs due to wear and tear of the house. With an owner finance property, weekly repayments mean funds toward repairs for the common ceiling leaks, or wall cracks.
For the part of the buyer, if the need to move into a new home is needed badly then this type of deal would be helpful as it cuts down on the cost needed such as down payments for move in. Sometimes in the event that one’s desired property is a bit pricey, you may ask the seller of the possibility of owner finance. Not only can you negotiate with regards to term price, and repayment intervals but in special cases can also request inclusion of essential house furnishings.
This type of deal, is much like an unsecured loan. There is no security in the part of the seller and would simply depend upon the buyer’s word to make repayments. If made through an escrow account though, that would be a different story because the actual property and monetary payments made acts as collateral, in the event that the buyer decides to call out of the agreement repossession takes place. Before entering into such a deal, put into consideration the factors that may prove difficulty in the course of renting, such as a steady income and the capacity to pay repayments. Read primers online regarding owner finance or contact independent housing firms to ask for more information on how you can start your path to home ownership with minimal start up costs.