The Pros and Cons of Owner Financing

The Pros and Cons of Owner Financing

You can see a lot of ads on the paper that says “Owner Financing Available”. This is a growing trend nowadays and it can greatly benefit you as a seller or a buyer. This type of financing lets the buyer make payments to the property directly to the seller. The buyer will have the freedom to purchase real estate without having to go to the bank or any lending institutions. Also, the seller can have the advantage of selling the loan as an investment.


There are factors that contribute to the price of a property. This will include the type of property, location, the age of the house, equity and the like. If you are a seller, it is better if you take note on all these things because this is what investors like to see. They buy all kinds of real estate notes and also deeds of sale trust.


The advantages of owner financing is that you can sell your property at your desire price. The buyer may be willing to pay market value or more to a house that requires a small down payment. Also, you can charge a higher interest rate compared to that of a bank. This way you will increase the overall price of your property and you may attract more investors. You can also sell a home faster compared to traditional mortgage loans. A lot of sellers like this idea, because they can get a monthly income. Apart from this, they get high interest rates even after the property is sold.


However, there are some disadvantages of owner financing. The seller may only receive a small down payment at the time of the loan. In addition, the seller will have the risk of the buyer not paying the loan. Plus there are clauses that you need to be familiar with so that you will be on the right track when engaging in this type of loan.


Owner financing can be confusing at types. Research should be done so that you should know what you are getting into. Moreover, the seller will have to explain everything to the buyer, that is why knowing everything is essential.