What happens if the seller goes belly up or doesnâ€™t pay any underlying mortgage? Lots of info on a similar subject on my blog, see the link below.
Occasionally there are legitimate deals out there, but if you get owner financing, make sure you hire your own attorney and you pick the title company. Make sure YOUR attorney reviews any contracts BEFORE you sign. People will tell you all kind of reasons you don't need to do this, and when you start hearing that, it is the time to back off. It's a huge investment, maybe the biggest one you will ever make, so why not spend $300 to get an attorney to review everything.
Best of luck to you.
REALTORÂ® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
Recommend to obtain your own financing purchase any property
Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
We are starting to see a few of these now, with financing guidelines becoming more stringent. It does carry some inherent risk though.
In today's market, there is an abundance of homes for sale, and the competition is tight. Buyer's that could have gotten a loan just a year or so ago are finding that it's a little tougher now, and are looking for alternatives.
Enter the Seller Financed Home.
These sellers are willing to take on the risk of financing the home to get it sold so they can move on, but not all sellers can do this. Many of the loans on homes have a "Due on Sale" clause. Which simply put, when you sell it, you have to pay off the note immediately. And unless they own it outright, is hard to do.
The risk for the buyer, is that the home has a note on it through the seller already, you are making payments to the seller, but the seller does not make the payments to the bank. It doesn't matter who is right or not when the constable is knocking at the door with foreclosure notices.
Be very careful, and make sure you have someone who understands the risks helping you along, i.e. an attorney. Just because an attorney is involved already DOES NOT mean they REPRESENT YOU.
It can be a good way for many to sell and to buy. Just be careful and have your eyes open prior to signing anything. An attorney may not cost as much as many people think, especially when your home is on the line.
Owner financing is offered as an option to buyer's who aren't credit worthy for bank financing. The terms almost always favor the seller and rightfully so because the buyer who isn't credit worthy is more of a risk. As a buyer you would want to meet with a lender to find out if you can qualify for bank financing first as the rates are still low. I work with some great loan officers if you need a referral. I would also recommend a first time home buyer's class. Call me for information.
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Like the other agents explained, it can be good or bad. Sounds like you don't have an agent to represent you and be there for questions like this. Give me a call or shoot me an email if you have any more home buying questions.
Talk to you soon!
So, just consider the house. If it is really worth it, and the loan package the seller is offering is reasonable, it might be a good idea.