If you're thinking about buying a home from a seller using seller financing (also called "owner financing") be sure you're aware of the benefits as the drawbacks! Keep reading this blog article to learn the 5 disadvantages of buying a home via owner financing in Fresno so you can Be Ready
When a seller wants to sell their house in the zip code area, they could wait for buyers to come up with bank financing, but there's another option as well: they could provide owner financing (also called "seller financing") in which the seller acts as the bank. The purchaser simply pays monthly payments to the seller until the home is paid off.
For a lot of folks, owner financing is an excellent alternative because it allows buyers to get into a house that they might not have the credit to buy, plus it gives the seller a steady cash flow if they don't want or need the great deal of money from the sale of the home.
However, is owner financing appropriate for everyone? It may not be.
5 Benefits Of Buying A Home Via Owner Financing In Fresno #1. Harder to get Bank financing is the most common way to sell so some owners might not be aware of owner financing as an option to sell their house. (But, we do owner financing and it's very common at our office so give us a call at 510-954-8857 to talk to us about our owner financing choices ).
#2. Fewer options Because it can be harder to find an owner willing to do owner financing, that might mean you have fewer potential homes to choose from when buying, or it might mean that you need to look at more homes before you find one that the owner is prepared to sell through owner financing.
#3. Terms Owner financing comes with many more flexible terms than you could normally get at a bank. However, this can also be a disadvantage because if you're not knowledgeable about the all of the possibilities you may overlook a term or you may create a term that does not give you an edge.
#4. You may pay more With conventional bank financing, the interest rate is fixed by the bank. Owner financing may have higher interest rates (determined by the other details of this contract) and you might end up paying more for the home. However, you might be fine paying more overall if it means you can get into a home that you can't otherwise get into.
#5. Owner With bank financing, you operate with a financial institution and they are professionals who have a code of conduct and business regulations to follow. However, with owner financing, it's only an agreement between you and the owner so be sure you're familiar with the owner first before making an agreement together.
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