Financing in 76114>Question Details

Kbdh, Home Buyer in 76114

Can someone please explain to me what a "owner to owner" sale is? and if it easier to purchase a home this way with bad credit...

Asked by Kbdh, 76114 Wed Feb 16, 2011

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T.E. is definitely spot on. You need to seek out a Real Estate attorney when purchasing a home in this way as you need to be sure that you are protected. There are promulgated contracts written by the state for a reason. Also the best advice would be to find a great lender that can work with you to repair your credit. When you purchase a home from an owner in this fashion with seller financing there is a high likely hood that you will pay over market value. Then if there comes a time you need to refinance out of the owner financing into a standard mortgage you might have a problem with value and obtaining a refinance. Be cautious!
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1 vote Thank Flag Link Tue Mar 8, 2011
All the advice given is excellent and should be taken. Here is another reason to look carefully at these type of deals especially when a mortgage is in place. If the lender does not allow for it's loan to be assumed or carried-back and becomes aware of the new situation, (which is usually mortgage fraud), then it is likely that in the small print on the original loan the lender can call the note. If neither parties, you living in the property making the payment or the original owner/note holder cannot pay the full amount remaining on the mortgage at the time the note is called then guess what happens--the bank collects the collateral=the home, and you get left out in the cold.

Buyer beware is very applicable here. If you really feel this is the right option for you then look at properties where the owner has title and no mortgage is involved. If there is a mortgage than look at assuming it for better protection.

Good luck,

Sandy Farmer
Realtor, GRI, CSSN
John Hall & Associates
0 votes Thank Flag Link Tue Mar 8, 2011
We also see advertisements here for "dueno a dueno" but beware.
Generally, these sellers are not legal experts and use contracts of their own. While the terms may appear to be correct, often the deal is a land contract where the seller can claim the property for any small infraction in paying the monthly.
Always seek legal advice when purchasing without a Realtor involved. Contract forms, other than those promulgated by the State of Texas, could have provisions that favor buyer or seller in an unbalanced fashion.
A Realtor can help you make an offer on a property so that the seller finances the sale, which is really the purpose of owner-to-owner deals. If the current owner has a mortgage in place, there will be other issues and consulting an attorney in those cases is recommended.
Seller financing is often used to overcome bad credit but the seller usually wants a larger than normal down payment, plus some dig deeply into the buyer's financial history to assure themselves that he actually has a good chance of paying the monthly for the foreseeable future.
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0 votes Thank Flag Link Mon Mar 7, 2011
You must be talking about "Lease to Own" ?
0 votes Thank Flag Link Wed Feb 16, 2011
I am not familiar with "owner to owner" unless you mean a For Sale By Owner. Bad credit is only a problem buying a home if you need financing, which most FSBO's require. You may find owner financing through a conventional listed property or FSBO but with bad credit most sellers will require an incentive for them to take the risk. Typically the incentive would be a large down payment and a high interest rate.
0 votes Thank Flag Link Wed Feb 16, 2011
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