There are different assumptions about the buyer purchasing property and the seller providing the finance. But leaving the dogmatic belief behind, seller financing is quite a creative financing solution for anyone going through any financial or personal changes. But the thing is, buyers using seller financing is not a ‘one size fits all.’
In simple terms, owner financing is an alternative for the property or the buyer who falls out of the traditional mortgage loan criteria. Still, it technically doesn’t involve any human element.
To get a better understanding of owner-financed buyers, let us look at a few examples:
Real Estate Investor
Suppose a real estate investor has bought a property that needs some repairs and decided to get it repaired to gain the resale profits. But it applies for a loan; the bank will deny it until the property is repaired. In such a situation, the solution is to seek temporary owner financing or a short-term private mortgage.
A Single Mom
Let us look at a single mom who purchased a worn-out property with owner financing and only $2000. She lived there for two to three years and, in the meantime, made improvements in the equity; later, she sold the house for a profit of $45,000, which she used to purchase at a better school district for her kid.
The Minority Family
Here’s another example of a minority family who wanted a loan but could not receive it because they did not have a credit score. This was because they only used cash to make payments rather than using any credit. But, they showed the seller the proof of all the timely payments and rent that they have paid, and on that basis, the family was able to purchase a home for themselves by using installment sale on land contract.
A Self-Employed Couple
This self-employed couple had a good credit score and was 20% down. Still, because they started their own company a year ago, they could not provide verifiable income for the past two years, which resulted in them not receiving the loan. But despite that, they were able to buy their dream home in the country with the help of owner financing. They also helped the seller to assign the Deed of Trust and Note to a reputed note investor for cash.
A Retired Couple
A retired couple living on their social security income required affordable housing, but they did not want to pay rent; therefore, they decided to locate a mobile home in a 55+ community. But, to their dismay, they found that circa 1974 mobile homes were not in the lender’s age restrictions. Hence, the solution they found was owner financing.
These were some of the examples of buyers who have purchased a property with the help of seller financing. When a bank says ‘No’ to you regarding a regular home mortgage loan, seller financing is your best alternative. If you do not have a great credit score, a verifiable income for the last two years, or aren’t 20% down, owner financing remains the option. Besides, the sellers who want to move their property quickly get a great opportunity because it attracts good deals.
In conclusion: Note investing is a creative financing solution for anyone needing help buying or selling property. That said, not all buyers can benefit from seller-financed loans, so consider your options before you commit. If this sounds like the right option for you and someone in your family, we’d love to hear from you! All it takes is one phone call with our team today, and we will set up an appointment at your convenience.
We look forward to hearing from you soon!
To gain a thorough understanding of Investing in Notes, peruse our article: Ultimate Guide to Selling Mortgage Notes
