owner financing what should the interested be that the owner charges?

Asked by Tom Kish, Washington, DC Sat Mar 10, 2012

looking to buy home for owed finning in wilmore

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9
John Siddons…, Agent, Charlotte, NC
Sun Mar 11, 2012
Tom,

There is no "standard" for owner financing interest levels. It is something that both you and the seller come to agreement on that both of you are comfortable with. Based on the level of risk for the seller, you may see higher or lower interest rates depending on factors including your credit score and down payment.

John Siddons
704-458-1843
John.Siddons@prucarolinas.com
1 vote
Daniel Fisher, Agent, Charlotte, NC
Sat Mar 10, 2012
Good afternoon, Tom.
Many state's laws provide that you cannot lend money at an interest rate in excess of a certain statutory maximum. The usury limit which is stated as the general usury limit is the rate that can be charged by one person or corporation to another. In North Carolina General Statutes § 24-1, the legal interest rate and the general usury limit is 8%. Unless Otherwise Stated, The rates are simple, not compound interest. However, there is a provision in NC for a variable rate, which is 16% or the T-Bill rate for non-competitive T-Bills. Above $ 25,000 there is no express limit. However, the law providing for 8% is still on the books - be careful and see an NC lawyer! If you appreciate an answer, please give "thumbs up". For the most helpful answer, please say thanks with a "best answer" click.
1 vote
Jennifer Fiv…, Agent, Red Hook, NY
Sat Mar 10, 2012
Tom great question;however this is something you would have to work out with the seller. With existing rates so low this would be the route to take only if you can't get regular financing and it will certainly cost you more.
0 votes
Mack McCoy, Agent, Seattle, WA
Sat Mar 10, 2012
Well, it depends, doesn't it?

Terms are negotiable - if you are an 800 credit score with 20% down and you're willing to pay the asking price, the seller might give you a better interest rate than the bank. If you're a credit wreck with closing costs down and trying to beat the seller up on price, the interest rates may scrape the legal usury ceiling of your state.

All the best,
0 votes
Daniel, , Baton Rouge, LA
Sat Mar 10, 2012
ask yourself one important question concerning owner financing

Why would the owner want to finance the property instead of selling out right ?
0 votes
Scott Godzyk, Agent, Manchester, NH
Sat Mar 10, 2012
Tom each state is different if the have a maximum that can be charged, NH has no maximum so numbers vary. You would expect to pay more than a bank would charge and the variable is how long they are holding the mortgage for. You should expect to see 6-10%
Web Reference:  http://www.ScottSellsNH.com
0 votes
dave, Agent, Charlotte, NC
Sat Mar 10, 2012
Tom,

it is up to what the seller is looking to charge. Generally a lot of it depends on how long you are looking to owner finance for, how much you are putting down and the price you and the seller agree to as a price.

The general rule of thumb is you probably have to put somewhere between 5% to 10% down payment. The general rule of thumb is the interest rates for good credit is around 4%. If he is charging you a little more than that it probably is fair.

I would look to see what the average sale price is in the neighborhood and make sure you are not paying more than fair market value for the house.
Web Reference:  http://www.davedicecco.com
0 votes
Allyson Ward, Agent, Charlotte, NC
Sat Mar 10, 2012
Whatever the Seller wants to charge is correct. The market typically will determine what he ends up charging though.
0 votes
Ron Thomas, Agent, Fresno, CA
Sat Mar 10, 2012
whatever he can get out of you!
I don't know what the usury laws are, but if he charges you 25% and you don't complain; then he is charging you 25%,
under these circumstances, hard money lenders, (very comparable) will charge 6-10%.

god luck and may God bless
0 votes
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