So let’s start with the Can You Owner Finance question. For people who have mortgages, owner financing is generally out. Even though you have the title to your house in your name, the bank still “owns” the house in the sense that they have a lien (the mortgage) on it. You can’t sell something with a lien on it without paying off that lien. This means you can’t transfer the house’s title to the new buyer without paying off your existing mortgage.
For most homeowners with mortgages, just paying off the mortgage in one lump sum isn’t practically feasible. But if you’ve lived in your home 15-30 yrs, never refinanced and don’t owe on your home then owner financing might be an option for you. If you need to get your house sold quickly, owner financing may be the way to go. When you owner finance, you’re basically the bank. You hold the mortgage on the home, and the new buyers pay you every month. There’s a written contract, just as there would be if they obtained a mortgage from a traditional lender, and you have the right to foreclose on the property if they don’t make their payments to you. While you won’t get a lump sum at the closing, you’ll get a down payment and the monthly mortgage payments. But is that really a good idea?
Let’s know look at the Should You Owner Finance question. There are pros and cons to the owner financing option. It can certainly work for some people, and it will allow you to go ahead and get your house sold. That can be a big deal if you need to move quickly or there are other circumstances where a quick sale is very important to you. However, owner financing also has some big disadvantages that you’ll want to consider. First and probably the most important aspect for everyone, you’re not getting your money right away. Other than the down payment amount, you’ll have to wait for the rest of your cash 10, 15, 20, possibly 30 yrs – whatever the terms you and the buyer agreed upon. If you’re planning for the proceeds of your home selling to go toward another large purchase, such as buying another house somewhere else, you’ll basically be out of luck.
Another concern when you owner finance your home in Cantonment, FL or Pensacola FL areas is the chance that your buyer will stop paying at some point (non-payment actually happens everywhere, I thought this was a good spot to remind you we serve the Pensacola area). Banks have teams of people who can come in and foreclose on properties. They know what legal steps to take, and how to handle things. Unless you’re a seasoned real estate/finance veteran, chances are you don’t have the knowledge at your disposal, and foreclosing can be difficult if you’re unsure of the process. It’s even more frustrating if you’ve moved out of the area and now have to try to do everything long-distance or you must travel back and forth.
A few other quick hits regarding owner financing…You’ll also need to make sure the property taxes get paid, and that there is proper insurance coverage on the property at all times, to protect your interests. Owner financing can be worth doing, but only if you’re knowledgeable about the process and prepared for any issues it may bring.
So, Can or Should you owner finance the sale of your home? Well my friend, that is totally up to you.
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