What is Owner Financing?
Owner financing is a way to buy or sell a house where the person selling the property acts like a bank. Instead of getting a mortgage from a traditional bank, the buyer makes payments directly to the seller over time. Both parties agree on the terms, including the purchase price, down payment, and how the payments will be made It's a flexible option for those who might face challenges with traditional loans, and it can lead to quicker transactions.
Key Components
- Promissory Note and Deed
A promissory note is a legal document that outlines the terms of the loan, such as the amount borrowed, interest rate, repayment schedule, and consequences for default. These are deeded properties, meaning the deed goes in the buyers name it is not rent to own or a lease option.
- Down Payment
Down payments are more flexible than through traditional loan methods and are agreed upon between seller and buyer.