If you are either selling or buying a home, there may be very good advantages to using owner financing for the transaction. This type of purchase often comes with very reduced interest rates and the payoff period is typically much longer than conventional bank loans. This trend has become more and more popular with people in recent years. The advantages far outweigh the disadvantages for both buyer and seller.
Selling Your Home Using Owner Financing
When you sell a house, typically the buyer will get a mortgage through a bank or private lender. This is how it has been done for many years and is still the most popular way of selling a home. However, when interest rates at banks are high, buyers may look to sellers to offer financing themselves. As a seller, you can offer this to prospective purchasers and sometimes gain more on the sale. You will not be able to get the money from the sale upfront as it has always been, but you will be getting regular monthly income from the sale for a predetermined amount of time. Usually, it would be for a term of ten years with a balloon payment at the end of this period. As stated, the interest you get will be lower than a bank would charge. But, at the end of the loan, you will have made substantially more money from this sale than you would have if they had taken out a traditional mortgage loan.