Many people are on the lookout for owner-financed homes in North Florida, but in order to determine whether seller financing is the right route for you, you’ll need to know exactly what it entails.
What Are Owner-Financed Homes?
A seller can choose to provide financing for the buyer, which can create a bigger return on investment for them. Rather than giving cash to the buyer to make the purchase, the seller gives the buyer credit for the purchase price of the home.
Both parties sign a promissory note that contains the loan terms, and then they record a mortgage or deed of trust with the public records authority.
The buyer pays back the loan over time. Usually the buyer includes interest in the payments, just as they would with a traditional bank loan.
In many cases, these are short-term loans. The idea behind seller financing is that the home will have increased in value enough (or that the buyer’s financial situation has significantly improved) that the buyer can transition to a traditional loan after a few years.
Why Do Sellers Offer Financing?
Sellers who own their homes outright may benefit from offering buyers their own financing. If the seller still has a mortgage on the property, the seller’s lender has to agree to allow this type of transaction.
Either way, the seller can typically make a larger profit by offering their own financing.
Common Types of Owner Financing
The most common types of seller financing include:
- All-inclusive mortgages
- Assumable mortgages
- Junior mortgages
- Land contracts
- Lease options
What Do You Need to Do to Buy an Owner-Financed Home?
You’ll probably need to fill out a loan application with the seller, and the loan will most likely be secured with the home. You’ll also have to come up with a down payment in most cases, although each seller will have his or her own terms.
Ready to Search for Owner-Financed Homes in North Florida?
If you’re ready to search for owner-financed homes in North Florida, we can help. We specialize in connecting buyers and sellers, so call us at 386-243-0124 or contact us online. We’ll begin searching for homes that meet your needs right away.