The key word in Darrell's statement is the word: "typically" - meaning some owner financing deals DO and some Don't have high interest rates. Most of my properties (as well as other investors I work closely with) have decent interest rates from 3 - 6%. A majority of my deals involve assuming (or taking over payments on the existing mortgage) which is: paying the exact same mortgage payment with the exact same interest rate that the current/original home owner/seller is paying, simply because the existing financing that the original owner/seller already has in place--is simply transferred to the new buyer -- so if the original owner/seller is already paying a decent interest rate due to his/her "decent - excellent" credit rating, then that benefit is simply transferred over to the new "end-buyer" (you).
Also, (and again, most of my properties - as well as other investors that I work with) have down payments that range from 5 -10%...very doable given today's economy and today's strict banking requirements.
And yes, you certainly can take 6 months to work on your credit prior to buying (good recommendation) - And you can also buy now (using owner financing), work on your credit while enjoying living in the home, and then refinance for an even lower interest rate because you've paid down some of the principal balance of the home you've been living in - ontop of having improved your credit standing. Darrell's point (I believe) is that there are some investors (and even regular home owners) out there with owner financing that are gougers - looking to charge astronomical interest rates with over-the-top down payment requirements, so you just have to be diligent in your search (if you do decide to use owner financing). In summary, I'm only saying that ontop of regular conventional financing--you DO have other options.
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Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
Well, good credit is needed to obtain a loan for a home through any lender. Now, you can definitely look for an owner finance possibility; however, the interest rate and down payment may be rather high.
I suggest talking with a lender about what your options are with improving your credit and go from there. If you would like the name of a good lender, feel free to contact me.
Realtor(r), ABR(r), e-Pro
Keller Williams Realty