If you’re thinking about buying a house and you’re exploring your financing options, make sure that you explore whether you should go through bank financing or owner financing. There’s already a lot written about bank financing, so this blog post is meant to give you the other side of the coin, to talk about why owner financing makes sense in Texas.
You’re probably familiar with bank financing – that’s when a bank or credit union or other lender gives you a mortgage loan so you can buy a house. The bank pays the seller the full amount of the loan that you need to buy the house, and then you pay the bank back over a period of several years until you own the house free and clear.
But it’s not the only way to buy a house, there’s also seller financing (also called “owner financing”). That’s when the seller agrees 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 partial payment over time until you’ve paid off what you owe.
So, you might be wondering, “Why does owner financing makes sense in Texas?”
Here’s our answer…
There are 3 main reasons why owner financing makes Sense in Texas.
First, it can allow buyers to get into a home faster. Owner financing can sometimes be useful if a buyer does not have the credit score available to get a mortgage loan, or if they cannot afford mortgage payments that a bank might require. With seller financing, the owner may not require clean credit or high payments, allowing buyers to get into a home faster when they may not be able to do so with bank financing.
Second, it provides flexibility to both the buyer and the seller. A bank uses fairly traditional terms: You’ll pay so much money as a down payment, then the rest paid back over time – either as a fixed rate or variable rate mortgage. But a seller and a buyer may find different terms that they agree to that aren’t as rigid. In fact, some agreements can become very creative and flexible for both parties!
Third, it can be a win the seller, too. A seller wants to sell their home, so offering owner financing gives them access to more buyers who might not typically be able to buy. By offering seller financing, they increase the number of potential buyers who would even look at the house. And not all sellers necessarily require a large cash down payment. Instead, many sellers, particularity older ones, may prefer setting up monthly payments so they receive monthly income similar to an annuity.
Owner financing is a great tool for both sellers and buyers; if you’re thinking about buying a house, owner financing can give you the means to buy your next house.
If you want to learn more about owner financing and speak to someone to learn how the process works, call our office at (772) 232-2383. Or fill out the form below.
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