Many buyers discover the difficult truth that banks require a very expensive down payment, of 5%, 10%, even 20% of the purchase price of the house. This can be almost too much money to save up! Not all home lending financial institutions are created equal. If you’re thinking about buying a home, you may have heard of the terms “seller financing” or “owner financing” and you’re not sure what they mean. In this blog post, we’ll answer what exactly is owner financing and how you can use it in Dallas Fort Worth as another option to buy your next home…
Buying a home can be an exciting new step in life as you move up from a rental or into a larger home to accommodate your growing life. It’s a time full of possibilities and dreaming as you look from one house to the next and see yourself living there. But the one question that every potential buyer has is, how will they pay for it?
Most people have heard of bank financing, where you get a mortgage loan from a bank or mortgage lender and you pay it off over time. But there’s also seller financing (also called “owner financing”) that you can get as well. So maybe you’re wondering, “what exactly is owner financing and how you can use it in Dallas Fort Worth?”
What Exactly Is Owner Financing And How You Can Use It In Dallas Fort Worth?
What Is Owner Financing?
Owner financing is when you skip going to the bank to get a mortgage and instead the owner/seller of the house acts as the bank. In other words, you still pay a monthly payment but instead of making it a mortgage payment to the bank, you pay the lender.
Owner financing, for buyers, is a powerful way to acquire property without having to go to a bank, and perhaps even to get more favorable terms than you’d get at a bank. It’s a lot like a loan from one individual to another, but instead of getting a bunch of money up-front, the owner is letting you stay in the house. You pay the owner of the house month by month, and over time you’ll eventually pay off the house and own it out-right.
But it’s not the only way to buy a house, there’s also seller financing (also called “owner financing”). That’s when the sellers agree to not to take the full purchase price for the house right away but instead takes the money over a period of years. In effect, they are acting like a bank, accepting monthly payment over a period of time until you’ve paid off what you owe.
How Can You Use It?
You can use owner financing to acquire a house in Dallas Fort Worth. When you find a house you want to buy, you simply go to the owner and ask them if they’d consider owner financing instead of waiting for you to see if you can get bank financing. The terms of the deal are one of the most important yet most overlooked parts of the deal. There are different types of owner financing arrangements but here’s the most important thing to know: everything is negotiable. Fortunately, with owner financing, you may be able to structure the deal where you have little or no down payment to make – essentially you pay back 100% of the house in monthly payments. When you find a seller who is willing to do an owner financing arrangement, it’s just a matter of bringing together the right components into the agreement to make it a win/win.
Owner financing is surprisingly common and used in a number of different ways – from first-time homeowners with bad credit, to real estate investors who cannot or do not want to use their own credit to acquire an investment property.
One of the biggest factors of any financing agreement is how long the agreement will be in force – in other words, how long will it take you to pay off the financing? Higher payments usually mean paying off the financing faster, while ultimately paying less interest.
However, lower payments spread out over a longer period of time might raise the overall price of the house but will also be more manageable for you. Again, find what works for you and the seller.
There are other considerations about different types of owner financing agreements but you’ll find that these are the main negotiating points in most situations. What Exactly is Owner Financing and why does it make sense? For many people, owner financing is an excellent alternative because it allows buyers to get into a home that they might not have the credit to purchase, plus it gives the seller a steady cash flow if they don’t want or need a large amount of money from the sale of the house. Owner financing has many advantages and is a great tool for both sellers and buyers; it can be a safe, secure, simple way to buy your next property without having to go to a bank and see if they’ll lend it to you. There are benefits and drawbacks to owner financing so make sure you research this opportunity thoroughly.
I hope you find the below video helpful and we hope to hear from you if you need any help or have any questions.
Another way to potentially get owner financing is to talk to us, TMC Property Solutions. We have properties that we sell using owner financing and we’ll be happy to show you how it works. You don’t need great credit to get your next property from us.
Want to see what owner financing houses TMC Property Solutions has available? We have an inventory of houses for purchase, many of which can be owner-financed. Click here now and fill out our short form to see our options, or call our team at (817) 550-5069 Opt# 9.
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