Jenae, Home Buyer in Fuquay Varina, NC

When it says owner financing does that mean lease to own? and do you just finish out the current owners loan and then you get the deed?

Asked by Jenae, Fuquay Varina, NC Mon Apr 26, 2010

If you wanted to move do you get to sell then or are you out of a home and equity?

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Be very cautious. There are a great many scams taking advantage of buyers who seek a shortcut to home ownership.…

An owner-financed purchase is NOT a lease to own. It is a transaction wherein you are offered credit by the owner.
There should be no debt on the property, or it is NOT owner financing. If you are paying someone else's debt, you are taking great risk.
Do NOT pay the loan amount to the owner and assume owner is making payments.

Do NOT get into an owner-financed purchase without a real estate attorney of your choice counseling you.
You will want to see appraised value, have inspections performed, negotiate needed repairs, and generally treat it like any other real estate purchase. That is what it is: a real estate deal.

Too many owners will offer financing to get a higher than market value for the property.
And you generally cannot just take over payments and get a deed.
The debt is the seller's debt, and generally not transferable to you.

Be very careful, and definitely hire an attorney to help you through an owner-financed, or rent-to-own, or lease-purchase transaction.

If you need this sort of transaction, usually it is due to credit issues or you lack funds for a good down payment. I suggest you go to work and fix your credit, and save some money and make your purchase from a position of strength.
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1 vote Thank Flag Link Mon Apr 26, 2010
Hi Jenae,

The previous response is correct. However, I would highly recommend you find someone to represent you that is experienced and has done owner finance deals. At the very least, hire an attorney to look over any documents before you agree to any terms. Most of the time an owner finance deal does not have the same consumer protection as a typical mortgage, unless the borrower demands the protection. Properties that have recently sold, such as the one you inquired about, that offer owner finance are typically investor owned. I’m an investor myself so I understand how the process works. Owner financing can be a great tool with the same protection as a typical mortgage as long as the borrower does their homework.

Hope this helps and good luck.

Matt Bossow

Real Estate Advisor/Broker
1 vote Thank Flag Link Mon Apr 26, 2010
No. Owner Financing typically means that the owner of the property will be the "lender". You will negotiate price, loan terms and length, and will make payments to the owner. You will have a closing and will have a deed made out to you as well as a deed of trust concerning the "mortgage" you have with the previous owner. In a lease to own situation you would create a tenant landlord relationship with the intention that you would be paying rent that would go toward your ownership or that after a set amount of time you would purchase the home either out right or with a bank backing your mortgage. The only time you would pay the current owner's loan is if you assumed their mortgage in which case you would get a deed immediately and be the rightful owner.


Kelly R. Smith
1 vote Thank Flag Link Mon Apr 26, 2010

You have had some really great answers from the other agents. I think that the most important thing for you to do is to be an "fully aware consumer."

Here are some things you should consider:

Have a lawyer look at the purchase documents.
Find out if you will get the tax benefits of owning a home.
Does the seller have a mortgage on the home? How are you guaranteed he will continue to pay it and not be foreclosed on?
Does the seller want a downpayment? Is it a resonable amount of money?
Is part / all of your Lease payment being applied to the purchase price of the home?
Remember to negotiate the sales price and have all inspections performed.
Are you willing to pay a Realtor to represent you as the buyer with your home purchase.
Have you spoken to a lender to see if there are loan programs available for you or are you assuming you can't get financing for a traditional home purchase??

Best of luck! Please feel free to call or email if you have other questions.
0 votes Thank Flag Link Tue Apr 27, 2010
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