Owner finance????

**dwnloom** · 10-24-2011, 02:07 PM

Does anyone know how owner fiance usually works and how to find properties that are owner financed? Any info is greatly appreciated.

Thanks,

**Greebo** · 10-24-2011, 02:18 PM

Owner fiance is when a person is engaged to marry their owner.
</snark>

Owner finance is when the owner of a property agrees to carry the paper on the property for the buyer, which means that the buyer has purchased the property with a mortgage held by the former owner, and if the new owner fails to pay, the old owner can foreclose and get their property back.

It's extremely rare and can usually only happen when there is no other debt on the property - and most owners today don't have much interest in carrying paper because why would you need to 'borrow' from them ? Can't you get a bank loan?

As for "how to find them"? Well there's no listing source as far as I know, because database listings are done for the property - how they're financed is irrelevant to the property being sold, they don't have to be financed at all, after all.

**sjohnson3278** · 10-24-2011, 02:36 PM

I have a friend that has a owner financed home. My friend pays the mortgage to the actual owner every month. It is extremely hard to find but if you can put something down on the property and make the payment every month, the owner of the property actually gets a good rate of return on their money every month, considering the current interest rates on investments now.

**Nishu** · 10-24-2011, 03:45 PM

If you want to purchase a home through owner financing, you should probably just look around for for sale by owner ads and contact the owner directly to see if they they'd be interested in selling on a contract. Most mortgage agreements have a due-on-sale clause that means that the mortgage holder can't sell the property unless they pay the mortgage in full, so technically people with a mortgage usually can't sell this way. People still do it though.

I think it would be a great way to avoid dealing with a bank, but you also need to be careful. You will need a real contract, just like you would with a bank. The seller will probably want references and a credit check along with a deposit. Owner financing is kind of like dealer financing when you buy a car. Since you're at their mercy for the financing, you have less bargaining power and will probably be paying a higher sticker price than if you had cash or bank financing.

I know someone who sold a house to a family member on a verbal contract. He had been living there for years and he kept asking for a real contract, but the owner was dragging her feet. I kind of wonder if she was avoiding a contract so that if she wanted to move back, she could just kick him out. She kind of messed herself up in the end though, because buyer ended up inheriting a home before she drew up a contract. I doubt very much that he stayed in that house after he inherited the new place. Contracts are important!

**dwnloom** · 10-24-2011, 05:52 PM

First - right now we cant get a bank loan. We did a deed in lieu on our previous home......long story short......we moved 250 miles away for work, my son is very sick......so we worked with our lender and they agreed.....we had our home on the market for quite awhile....nothing was moving in our area.....very depressed section of Arkansas. So, I have been back at work for 2 yrs making good money, my husband is back at work making good money....we really dont have any bills except for dr bills. We thought maybe someone might consider renting to own vs leaving a home empty....maybe its not a good thought, but had to ask for advice....

**frugalfranny** · 10-24-2011, 05:55 PM

I see ads on CL for owner financed. Have been looking just in my own area and AZ though.

In prior times, I bought w/owner financing. I paid the owner each mo. and they sent me a receipt back. Had to also send them house insurance papers once a year, proof that I was carrying ins.

They are out there, you just have to dig. Might have to pay a larger down payment too.

**mh3rdwheel** · 10-24-2011, 07:15 PM

Is it not like a land contract, we are looking at a house to do this with.

**annymoll** · 10-24-2011, 07:51 PM

What happens if the house payments are made in a timely fashion, but the home leinowner does not pay the note, or the property or homeowner goes into bankruptcy?Unless the property is owned outright by the person who will carry a note( in which case would YOU be included in the bankruptcy as a debt to be wiped clean?) then the bank will have ownership of the property. Could be a tangled mess.

**Greebo** · 10-25-2011, 08:27 AM

Originally Posted by annymoll

What happens if the house payments are made in a timely fashion, but the home leinowner does not pay the note, or the property or homeowner goes into bankruptcy?Unless the property is owned outright by the person who will carry a note( in which case would YOU be included in the bankruptcy as a debt to be wiped clean?) then the bank will have ownership of the property. Could be a tangled mess.

This is part of the reason why most mortgages require that they be paid off if the home is sold. Any reputable title company asked to do the paperwork for an owner financing deal will require that the existing lien holder be paid off with the sale - which means the owner who's financing has to be able to pay off his own debt while not getting paid up front by the new owner.

dwnloom - your least risky approach right now and IMO the best one is simply to rent for a couple of years and stockpile cash so you have a big fat downpayment for when you can buy. It won't be but a couple years before you can look at getting a mortgage again - don't rush into something you aren't financially ready for again.

**mamamia** · 10-25-2011, 09:34 AM

Afrer moving here to Fl, we did owner financing, but we just happened to stumble into buying the house we were renting. Our landlord was foreclosing on it, and his personal mortgager (same person we had), offered it to us. It was win/win. Long story short, we were locked in at 10%, but, when interest rates were going down, we refinanced at 6.75%.

When we made the purchase, our credit was a little scarey at the time too, so no worrying about a credit check, and there were no closing costs doing it thru the owner.

I also know someone who for one reason or another, was able to talk the seller into a partial personal financing. She has 6 kids, loved the house, so went directly to the owner, and "talked".

Hope you find what you need. I guess I would start by asking any, and everyone I know. Also, if I saw that "perfect" house with a For Sale sign in front of it, I might find the nerve to ring their bell and do some "talking". There's alot of anxious sellers out there right now, and this could be a solution for them too. Just mind the legal matters to be safe.

Theresa

**Lora88** · 10-26-2011, 10:59 AM

the home I lived in previous to now we were renting and the owner wanted to sell we purchased it from him on a private mortgage it went well and at the time he was getting 8.75 interest rate from us. It was a 20 year mortgage and we paid it off in 15 years It can be a good thing however everyone invovled has to be reputable It can be tricky but it is a way to get a home without going thru the whole bank mortgage nightmare. BTw imagine getting 8.75 on your money now lol