What Is Owner Financing?
What is Owner Financing?
What is Owner Financing?
By Common Ground Properties I had a great conversation yesterday about Owner Financing with a
woman named April (names were not changed to protect the innocent).
April had been scouring the Internet high and low trying to figure
out
what does this darn thing called Owner Financing really mean ????
April ran into all sorts of articles on rent to own, lease option and
then a bunch of different sites saying owner financing. April
finally gave up the search and did what I encourage all of you to do
she picked up the phone and called me. When you see my Austin Owner
Finance ads all over the place that say Just Call Jessica. I really
mean it. I do my best to always answer the phone or call you back
right away. So if youre looking for owner financing answers youve
come to the right place. Ive been buying and selling homes owner
financed homes for over 8 years so Ive seen it all, done it all and
can explain to you in detail all the nuances.
The biggest question April had for me was whats the difference
between rent to own, lease options and owner financing.
Owner financing is a generic term that is used by anyone willing to
let you move into the home without getting a bank loan first and
giving you some kind of interest or ownership in the home.
Owner financing is like using the generic term transportation there
are many forms of transportation. Transportation helps you achieve
your goal of getting somewhere. Some get you where you want to go
faster others are terrible ways to get to your destination. If your
goal is get to Hawaii technically walking is a form of
transportation and eventually it would get you there but it would be a
very long and costly journey.
Owner financing helps you achieve your goal of home ownership. Some
forms of owner financing help you achieve your goal faster and some
help you get there but it can be a very long and costly journey.
The most common forms of owner financing that youll here these days:
Lease Options or Lease Purchase or Rent to Own
Wrap Around Mortgage
Subject To/Mortgage Assignments
Free & Clear Owner Financing
Lease options, lease purchase and rent to own are the most widely know
forms of owner financing and in my opinion the worst kind. These
transactions look as follows:
Seller owns house
Seller has existing mortgage on house (most of the time)
Seller advertises Austin owner financed homes for sale
Seller lets you move in
You and Seller sign lease/rental agreement
You and Seller sign purchase agreement or option to purchase
agreement. This agreement says in the future the seller agrees to
sell you the house. You agree to fix your credit so you can qualify
for a new loan within the time frame agreed upon.
Seller collects down payment, deposit or option money from you. Which
99.99% of the time is non-refundable.
You DO NOT get title to the home when you move in. Your name is NOT
on the deed when you get your keys. The original seller remains the
legal owner until you get your new bank loan.
I had a woman call me recently. 2 years ago she gave her seller
20,000 down on a house. She fixed up the home, put new tile,
repainted, new appliances the works. Its her house (or so she
thought) she bought it with owner financing.
Well 2 years ago the credit score required for an FHA loan was 580.
Her 2 years were up and she was very excited her credit score was now
600 a full 20 points over the required 580. She quickly found out
that the new benchmark was 620 and she could not qualify for the loan.
Know what her owner finance seller did?
The seller gave her a notice to vacate, evicted her from home, put it
on the market and sold it to someone else (and kept her $20,000 of
course). For two years this woman thought she owned the home she
bought it with owner financing right? Nope she was a glorified
tenant with an option to purchase the home if she met all the strict
requirements within the time frame allowed. The credit rules changed
and voila all her hard work and money was gone. Her only option
hire an attorney and try and fight it but she did not have the $2,500
for the retainer that the attorney wanted to just start the case.
If you want to buy an Austin owner financed home dont settle for
anything less than getting the deed.
To me true owner financing is where you the buyer actually get the
deed to the home the day you get your keys. Also the time allowed to
obtain new financing. If the credit markets move the goal post and
make the new credit score 700 in a few years, then the financing
should be flexible and give you the time you need to meet the new
requirements.
Other issues this lease option buyer could have run into. If the
seller had died and the house had gone into probate or if the seller
was sued and someone wanted to come after the sellers assets. In
either case since the buyer did not actually have the deed and title
to the home. Someone else really owned her home. She just had an
option to buy it in the future. So if lease options, lease purchase
and rent to own are the wrong way to do owner financing what is the
right way you ask????
Your next three owner financing options are:
Wrap Around Mortgage
Subject To/Mortgage Assignments
Free & Clear Owner Financing
In all of these options the deed is transferred to you immediately.
The day you invest you down payment is the day you get your keys and
the day your name appears on title to the home.
For homes with Free & Clear owner financed homes there is no
existing loan in place. The seller of the home does not owe any money
on the home.
For homes sold with a wrap around mortgage, subject to or via mortgage
assignment. There is an existing loan in place and the seller is
willing to leave that in place and will use your monthly payment to
pay that loan. The loan stays in place until you refinance.
If the seller dies, gets sued or more commonly the home goes up in
value. No matter what you you own the home. Its yours. Now is the
best time in 20 years to be buying a home. Home prices are lower than
what people were buying homes for in 2004 to me that translates into
an incredible opportunity.
Wrap Around Mortgages, Subject To and Mortgage Assignments can be very
tricky and its important they are setup well. I dont share publicly
my unique safeguards that I have in place to protect you and your
investment.
I encourage you to call me at 512-215-4987 and ask me how my owner
financing program is different from the rest. Every person and their
brother is out selling owner financed homes these days most are new
to the business and dont have the years of experience it takes to
make sure you, your family and your investment are well protected. I
have a long list of references you can speak to that bought owner
financed homes from me years ago.
When checking references (and I highly recommend that you do) dont
talk with a buyer who bought just a few months ago, talk with someone
who bought several years ago. Only then will you get a true picture
of what your future could look like.
When you buy an owner financed home from me, you are creating a long
term relationship with myself and my company. I look forward to
working with you and appreciate the opportunity to be of service.
Please dont hesitate to call me 512-215-4987 with any questions
and I really mean it just pick up the phone and call me. As an
added incentive I promise to laugh at your jokes and patiently answer
all your questions!
I had a great conversation yesterday about Owner Financing with a
woman named April (names were not changed to protect the innocent).
April had been scouring the Internet high and low trying to figure
out
what does this darn thing called Owner Financing really mean ????
April ran into all sorts of articles on rent to own, lease option and
then a bunch of different sites saying owner financing. April
finally gave up the search and did what I encourage all of you to do
she picked up the phone and called me. When you see my Austin Owner
Finance ads all over the place that say Just Call Jessica. I really
mean it. I do my best to always answer the phone or call you back
right away. So if youre looking for owner financing answers youve
come to the right place. Ive been buying and selling homes owner
financed homes for over 8 years so Ive seen it all, done it all and
can explain to you in detail all the nuances.
The biggest question April had for me was whats the difference
between rent to own, lease options and owner financing.
Owner financing is a generic term that is used by anyone willing to
let you move into the home without getting a bank loan first and
giving you some kind of interest or ownership in the home.
Owner financing is like using the generic term transportation there
are many forms of transportation. Transportation helps you achieve
your goal of getting somewhere. Some get you where you want to go
faster others are terrible ways to get to your destination. If your
goal is get to Hawaii technically walking is a form of
transportation and eventually it would get you there but it would be a
very long and costly journey.
Owner financing helps you achieve your goal of home ownership. Some
forms of owner financing help you achieve your goal faster and some
help you get there but it can be a very long and costly journey.
The most common forms of owner financing that youll here these days:
Lease Options or Lease Purchase or Rent to Own
Wrap Around Mortgage
Subject To/Mortgage Assignments
Free & Clear Owner Financing
Lease options, lease purchase and rent to own are the most widely know
forms of owner financing and in my opinion the worst kind. These
transactions look as follows:
Seller owns house
Seller has existing mortgage on house (most of the time)
Seller advertises Austin owner financed homes for sale
Seller lets you move in
You and Seller sign lease/rental agreement
You and Seller sign purchase agreement or option to purchase
agreement. This agreement says in the future the seller agrees to
sell you the house. You agree to fix your credit so you can qualify
for a new loan within the time frame agreed upon.
Seller collects down payment, deposit or option money from you. Which
99.99% of the time is non-refundable.
You DO NOT get title to the home when you move in. Your name is NOT
on the deed when you get your keys. The original seller remains the
legal owner until you get your new bank loan.
I had a woman call me recently. 2 years ago she gave her seller
20,000 down on a house. She fixed up the home, put new tile,
repainted, new appliances the works. Its her house (or so she
thought) she bought it with owner financing.
Well 2 years ago the credit score required for an FHA loan was 580.
Her 2 years were up and she was very excited her credit score was now
600 a full 20 points over the required 580. She quickly found out
that the new benchmark was 620 and she could not qualify for the loan.
Know what her owner finance seller did?
The seller gave her a notice to vacate, evicted her from home, put it
on the market and sold it to someone else (and kept her $20,000 of
course). For two years this woman thought she owned the home she
bought it with owner financing right? Nope she was a glorified
tenant with an option to purchase the home if she met all the strict
requirements within the time frame allowed. The credit rules changed
and voila all her hard work and money was gone. Her only option
hire an attorney and try and fight it but she did not have the $2,500
for the retainer that the attorney wanted to just start the case.
If you want to buy an Austin owner financed home dont settle for
anything less than getting the deed.
To me true owner financing is where you the buyer actually get the
deed to the home the day you get your keys. Also the time allowed to
obtain new financing. If the credit markets move the goal post and
make the new credit score 700 in a few years, then the financing
should be flexible and give you the time you need to meet the new
requirements.
Other issues this lease option buyer could have run into. If the
seller had died and the house had gone into probate or if the seller
was sued and someone wanted to come after the sellers assets. In
either case since the buyer did not actually have the deed and title
to the home. Someone else really owned her home. She just had an
option to buy it in the future. So if lease options, lease purchase
and rent to own are the wrong way to do owner financing what is the
right way you ask????
Your next three owner financing options are:
Wrap Around Mortgage
Subject To/Mortgage Assignments
Free & Clear Owner Financing
In all of these options the deed is transferred to you immediately.
The day you invest you down payment is the day you get your keys and
the day your name appears on title to the home.
For homes with Free & Clear owner financed homes there is no
existing loan in place. The seller of the home does not owe any money
on the home.
For homes sold with a wrap around mortgage, subject to or via mortgage
assignment. There is an existing loan in place and the seller is
willing to leave that in place and will use your monthly payment to
pay that loan. The loan stays in place until you refinance.
If the seller dies, gets sued or more commonly the home goes up in
value. No matter what you you own the home. Its yours. Now is the
best time in 20 years to be buying a home. Home prices are lower than
what people were buying homes for in 2004 to me that translates into
an incredible opportunity.
Wrap Around Mortgages, Subject To and Mortgage Assignments can be very
tricky and its important they are setup well. I dont share publicly
my unique safeguards that I have in place to protect you and your
investment.
I encourage you to call me at 512-215-4987 and ask me how my owner
financing program is different from the rest. Every person and their
brother is out selling owner financed homes these days most are new
to the business and dont have the years of experience it takes to
make sure you, your family and your investment are well protected. I
have a long list of references you can speak to that bought owner
financed homes from me years ago.
When checking references (and I highly recommend that you do) dont
talk with a buyer who bought just a few months ago, talk with someone
who bought several years ago. Only then will you get a true picture
of what your future could look like.
When you buy an owner financed home from me, you are creating a long
term relationship with myself and my company. I look forward to
working with you and appreciate the opportunity to be of service.
Please dont hesitate to call me 512-215-4987 with any questions
and I really mean it just pick up the phone and call me. As an
added incentive I promise to laugh at your jokes and patiently answer
all your questions!
You can visit us at
www.austinownerfinance.com By Common Ground Properties by: Common Ground
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