Home Buying in Mount Carmel>Question Details

Randy Smith, Other/Just Looking in Massachusetts

what are some of the pro's and con's of the owner financing for the buyer?

Asked by Randy Smith, Massachusetts Sun Mar 23, 2008

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Good Question. Owner financing can be as good or better than bank financing, especially for the buyer. Seller may be willing to hold a 2nd mortgage (behind a bank held 1st) or finance the whole thing.
Benefits from the buyer's side:
1) there are ususally fewer closing costs with seller financing. That can be a significant savings compared to the myriad of fees that often come with conventional financing.
2) Seller MAY be willing to finance where a bank will not, for any # of reasons; high debt to income, un-verifiable income, work needed to be done to the property, etc.) If you have a problem getting bank financing, seller financing may close the sale.
3) Creative 1st and 2nd mortgage combinations possible.
From a sellers point of view, it is an extended risk and cash is not immediately available for other purposes. However, it may be jsut the thing if you other option is to put the proceeds from the sale in some interest bearing instrument tht carries a lower interest rate.
Hope that helps
1 vote Thank Flag Link Wed Mar 26, 2008
Pros: Your credit stays clean from the debt.
Cons: Your rate is usually higher.

Owner financing can be a great option if you are short on cash but have good credit. I would like to know more about your situation to know whether owner financing is right for you!
1 vote Thank Flag Link Tue Mar 25, 2008
The only advantage I would see is if you didn't qualify for a conventional mortgage. You are usually better off going through a good Lender rather than do Owner financing. Feel free to contact me if you would like some help.

Michael D Delp
Mortgage Pro
4802 Old Bethlehem Pike,
Telford Pa. 18969
Ph- 215-453-1025
Fax- 215-453-1012
Cell- 610-762-0318
1 vote Thank Flag Link Mon Mar 24, 2008
The buyer will not hold the Deed of Trust (ownership) until the note is paid off.
1 vote Thank Flag Link Sun Mar 23, 2008
Usually when there is owner financing two things are involved.
1) The seller is having a hard time selling & has resorted to seller financing to unload the property.
2) Seller wants a high price or wants to charge a higher interest rate to get a good return on the investment.
Seller financing must be overlooked by Real Esate Attorney before signing so you are protected.

There are bank mortgages that allow a combination of a bank mortgage & a seller held 2nd mortgage instead of downpayment.

If you have any question feel free to contact me.
0 votes Thank Flag Link Thu Mar 27, 2008
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