A Buyer’s Guide To Owner Financing Property In North Florida
Owner financing is a great option for you to consider when it’s time for you to purchase property (also known as an installment sale transaction or owner-carry installment sale). Since the recent real estate market crash, lenders have tightened their lending guidelines for mortgages. It is not impossible to obtain financing, but it is, without a doubt, tougher to qualify. Here are a few benefits of owner financing;
It’s Easy To Qualify. Owner financing does not usually require traditional bank income and credit approval. Are you self-employed and cannot prove income? Are you new to your job and cannot meet strict lender guidelines for time on the job? Do you have poor credit because of a divorce or recent bankruptcy? Lenders are also starting to change how they look at past due medical bills. In the recent past, past due medical bills weren’t a big factor and could be explained away. That is changing.
Here are a few more factors to consider:
- Even if you could qualify for a loan, the interest rate will be very high if you have poor credit.
- If you have poor credit, few conventional lenders will offer fixed interest rate loans.
- There are many reasons why a buyer cannot (or will not) qualify for a conventional bank loan.
- If you desire purchase land, most banks will not lend for vacant land purchases.
- The installment sale (owner financing) now becomes the perfect solution for that person.
Fast Closing. A buyer can, in a lot of cases, close and move into a property within days, since there is no third party lender holding up the transaction.
No Loan Costs. One of the biggest benefits for the buyer is not having to pay the costs associated with conventional loans. Points, origination fees, underwriting charges, appraisal, credit reports, title insurance and the host of other “junk” fees charged by banks / lenders can amount to thousands of dollars at closing. The buyer is free from these with an owner finance / owner-carry installment sale.
Buyer Credit Rating. An installment sale (owner financing) may give the buyer a chance to improve his credit rating by owning a home or land and making payments timely.
This is also a winner for the person selling. Sellers establish a monthly income for themselves and, because of the interest they earn, they’ll make more money off of the property in the long run.
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