Case Study : Owner Financing For Real Estate

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Goal: to post a guide to owner financing in real estate Total Word Count In This Document: 860 Title: ?Owner Financing? What is owner financing? According to Investopedia, owner financing is when a property buyer finances the property?s purchase directly through the person or entity, such as the bank, selling it. This happens when the prospective property buyer cannot receive funding or a loan from a conventional mortgage lender, is unwilling to pay the market interest rates, or if the seller is having difficulty selling the property. Also known as ?creative financing? or ?seller financing?, owner financing may only cover a portion of the property?s purchase price, with a smaller bank loan making up the difference. Owner financing is…show more content…
Owner financing can be advantageous for buyers because it makes the closing process faster, saving them a lot of time and effort and trouble, and it brings the closing costs down much lower, also saving them a lot of money. The down payment amount can also be extremely flexible since prices are negotiable between the buyer and the seller in owner financing. However, owner financing can also be disadvantageous for buyers because most of the time buyers have to pay a higher interest rate than they would if they had gotten a mortgage loan from a bank, they will have to prove that they are worthy buyers who can repay the financing from the seller over the time agreed to in the promissory note, and they need to make sure that the seller is the complete owner of the property, meaning that they paid off their mortgage and no other banks or lenders are involved. Because it is so risky and unconventional, owner financing is uncommon. When a seller is willing to offer financing, it may be because they want to minimize the carrying costs while waiting to find the perfect buyer and sealing the deal quicker, increasing the possibility of garnering the property?s full price value, getting a down payment to buy another property, distinguishing the property from other similar listings in order to get it sold quicker (especially in a bad housing market),

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