What Is Owner Financing?

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Owner or seller financing simply means that the current homeowner puts up part or all of the money required to buy a property. In other words, instead of taking out a mortgage with a commercial lender, the buyer is borrowing the money from the seller. Buyers can completely finance a purchase in this way, or combine a loan from the seller with one from a bank.

 

For the financed portion, the buyer and seller agree upon an interest rate, monthly payment amount and schedule, and other details of the loan, and the buyer gives the seller a promissory note agreeing to these terms. The promissory note is generally entered in the public records, thus protecting both parties.

 

Generally, the seller retains title to the home until the buyer has repaid the loan in full.

 

Southern One’s Financing Benefits for Buyers

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• Little or no qualifying. Our qualifications is typically less stringent and more flexible than those imposed by conventional lenders.

 

• Tailored financing. Unlike conventional loans, buyers can choose from a variety of loan repayment options. 

 

• Down payment flexibility. Down payments are negotiable. If a seller wants a larger down payment than the buyer possesses, sometimes sellers will let a buyer make periodic lump-sum payments toward a down payment.

 

• Lower closing costs. Without an institutional lender, there are no loan or discount points, and no origination fees, processing fees, administration fees, or any of the other assorted miscellaneous fees that lenders routinely charge, which automatically saves money on buyer closing costs.

 

• Faster possession. Because buyers and sellers aren't waiting for a lender to process the financing, buyers can close faster and get possession of the property sooner than with a conventional loan transaction.