If you’re like many people, you’ve heard of both seller financing and “rent-to-own” financing, but do you know the differences between the two?
What is Seller Financing?
Seller financing, which is also commonly referred to as owner financing, is a loan that the seller provides to the purchaser. Generally, the buyer and seller reach their own agreement that can include:
- The amount of the down payment
- The frequency and amounts of installment payments
- The interest rate
Usually with seller financing, the buyer makes a balloon payment at some point to completely purchase the house from the seller. Sometimes in order to make the balloon payment, the buyer takes out a conventional loan.
What is Rent-to-Own Financing?
In a rent-to-own situation, the rent-to-own has the option (and the first right) to buy the home at some time in the future. Until that happens, the owner is the landlord and retains ownership of the home; the landlord-owner is the person whose name remains on the deed and who is responsible for making mortgage payments.
What Are Other Differences Between Owner Financing and Rent-to-Own?
The one of the major differences between owner financing and rent-to-own financing is when ownership transfers between the two parties.
With owner financing, ownership of the property changes hands at closing – and that occurs at the beginning of the business relationship and.
With Rent-to-Own financing, the ownership of the property doesn’t change hands until the renter has paid enough to purchase the property from the owner.
Are You Looking for a New Home in North Florida (or Are You Selling Yours)?
If you’re looking for a new home in North Florida, or if you’re selling one, we can help.
Call us at 386-243-0124 or get in touch with us online. We’ll be happy to connect you with the right buyers or sellers.