Is Owner Financing Land a Good Idea?

If you’re like many land sellers in North Florida, you’re wondering whether offering owner financing is a good idea – and this guide can help you make the right decision.

Although mortgages are the most common way to finance a home, another option exists: Owner financing.

Owner financing occurs when the seller finances the purchase for the buyer. This type of financing means that the buyer doesn’t have to go through a traditional lender to get the funds to buy the property; instead, they make regular payments to the seller until the property is paid in full.

How Does Owner Financing Work?

Owner financing means that the seller gives “credit” to the buyer. The buyer makes regular payments until the amount is completely paid, but only after signing a promissory note to the seller that outlines the:

Interest rate at which the buyer is paying the seller
Repayment schedule
Consequences of default

Most of these deals are short-term, with the full amount of the remainder of the balance due in 5 to 10 years. However, you can set whatever terms you’d like for your own owner financing deal – it’s completely up to you and your buyer.

Pros and Cons for Sellers Offering Owner Financing

Like anything else, there are pros and cons for sellers who offer owner financing on a piece of land in Lake City (or elsewhere). Check out this table for more information.

Pros of Owner Financing for Sellers	Cons of Owner Financing for Sellers
You can sell the property “as is” without making repairs that traditional lenders may require	You may need to cover your bases legally – talk to your REALTOR about whether you need to involve a mortgage loan originator in your transaction
You may be able to earn good interest on the payments	The buyer can stop making payments but remain on the property, which puts you in an eviction situation and could put you at risk for foreclosure (if you’re still making payments on the property yourself)
You can sell your promissory note to an investor	If you take back the property because the buyer backs out of the deal, you may have to pay for repairs and maintenance, depending on the situation
You retain the title to the land, so if the buyer defaults, it’s still yours
You may be able to close faster than you would if your buyer had traditional financing

Are You Buying a Home or Land for Sale in Lake City?

If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.

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