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Born Again Properties, Inc.

What is Owner Finance
When an owner is willing to finance the purchase of their home, they are basically acting as a substitute for the bank. If you were to get owner financing, you would set up a contract with the house owner and pay them the monthly premium, plus interest, just as you would with a bank.

So, owner finance is not much different from bank finance from the perspective of the buyer. Some minor differences will occur. Obviously, you will not get a mortgage packet and probably won't get monthly bills. You will be expected to send your check in every month.

Why You Might Want to Find Owner Finance Homes
There are a couple of main reasons a buyer may look to buy an owner finance home. The big one is that the buyer cannot qualify for a traditional bank mortgage, whether because of poor credit or not being able to come up with the down payment. A buyer also may be looking for more flexible payment options and a personal connection with the seller.

Who Will Owner Finance Homes?
It is pretty rare to find a seller who will owner finance their home. This is simply because most home owners still owe a lot of money on their homes when they sell, and they are looking to buy a new home.

That being said, there are three basic categories of people who might offer to owner finance the sale of their home.

First, there is the homeowner who has completely or almost completely paid off their home. They may see owner financing as a way to make a bigger profit, as they will not only get the full price of their home, but will also capture the interest. This homeowner would be the type of person who is looking to create some passive income that will come in regularly, and will typically be older and involved with several different investment opportunities.

Next, there is the category of family. A relative, usually older, might be willing to owner finance a home to help out a family member. This will usually happen if the home is paid for or if the relative is moving into a cheaper residence, such as an apartment or retirement home. In some cases, the relative will want to stay in the home and live with you as you buy the home over time.

The last group of people that will offer owner finance are investors. These are folks who look at the big picture and don't mind getting paid in monthly installments rather than lump sums. In most cases, the investors will buy the home with cash. This allows them to sell it back to you at a monthly rate. Finding this type of investor is your best bet for getting into an owner finance home.

Partial Owner Finance
While getting a complete owner finance agreement is rare, you will have an easier time setting up a partial finance deal. Say an owner wants to sell a house for $100,000 and owes $75,000. You may not be able to get a loan for $100,000 but can get one for $80,000. You may be able to work out a deal with the owner to mortgage $80,000 and owner finance $20,000. That way, the owner can pay of the house with the mortgage check and receive the rest in monthly payments.

There are some things to consider on a partial owner finance. You will probably have to agree to a higher interest rate on the owner financed portion of the deal. You also may need to agree on a shorter time period than the mortgage. For instance, the owner might agree to owner finance the $20,000 for five years, with reasonable monthly payments and then a balloon payment due at the end of the five years. At that time, you will likely have enough equity built up to get a bank financed loan to pay off the balloon amount.

The Difference Between Lease to Own and Owner Finance Homes
There is a difference between lease to own and owner finance homes. In a lease to own situation, you are basically renting the home until a certain time when you will have the option to buy it. Some of your rental payment may go toward paying down the final purchase price of the home.

In an owner finance situation, you take ownership of the home, just as you would with a traditional mortgage. You are paying your premium and an interest rate. The interest rate on owner financing is usually higher than on traditional mortgages.

Born Again Properties
At Born Again Properties, Inc., we are committed to helping you buy the right house for your family. We offer several financing options, including owner financing in certain scenarios. We are investors who look at the big picture. Talk to us about what your best financing option is. Fill out our Buy a House form and we will be in contact with you.