Home Selling in Knightdale>Question Details

Pennie, Home Seller in Knightdale, NC

Can I owner finance my home, I still have a mortgage on it but need to sell?

Asked by Pennie, Knightdale, NC Mon Sep 6, 2010

Help the community by answering this question:


It is unlikely that you can do this legitimately.
Almost every loan has a "Due on Sale" clause, which means if you transfer an interest in the property to another person, the lender has the right to demand full payment.

REading the load documents, and conferring with a real estate attorney would be two great steps prior to entering into any arrangement.
Web Reference: http://www.MikeJaquish.com
1 vote Thank Flag Link Mon Sep 6, 2010

I have land that I want to sell under owner financing or lease to purchase or both. The land "SOLD" and the purchaser and I are not quite sure how to do this. Under my mortgage there is not "Due on Sale", furthermore I called my mortgage company and I was told as long as they continue to make payments, I could do what I wanted.

I am hearing different things from different attorneys. I want to finance 100,000.00, seller putting 20K down, will make her monthly payments directly to my mortgage company (already said ok) plus (my bank draft securly pays my mortgage). Then every FEB for 5 yrs or until loan is payed in full buyer will pay 10K (every feb)

Can I finance the whole amount or just the amount that is left over after my original is paid off.
0 votes Thank Flag Link Wed Jan 27, 2016

Unfortunately I believe Mike nailed it. Just about all mortgages these days have that "due on Sale" clause. The few that do not are VA mortgages and even then you must be VA qualified to take it over. So the answer is that you will most likely not be able to "owner finance" your home. However the closest you could come is to do a "lease purchase" of the home. It can be structured so that it is almost like a loan. The buyer can make a downpayment to you, the "lease" payments can be structured so that A) it is enough to cover your mortgage payment and a small percentage goes toward the purchase price. Then when the buyer is able they simply move forward and purchase the home with a mortgage.

Hope this helps,
0 votes Thank Flag Link Wed Sep 8, 2010
Mike beat me to the punch with the correct answer. Though, even if you could owner finance, you would still be on the note (mortgage) and you wouldn't be able to buy another home until this one is paid off. And what if your buyer defaulted? It is never a good idea to OF unless you own the home free and clear (or if there is no Due on Sale clause). Please seek the advice of an attorney if you are considering this.
Web Reference: http://www.drewludlow.com
0 votes Thank Flag Link Mon Sep 6, 2010
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