You may have seen several real estate companies popping up in your neighborhood as of late. Many of them are offering owner financing deals as an alternative to renting a home.
But what is owner financing? Is it really superior to renting? And how do you evaluate an owner-financed deal to make sure it’s right for you? We break it down below:
Owner Financing: Put simply, owner financing is when the owner of a home decides to act as the bank and loan the home to you at an agreed upon sales price. The down payment is usually around 5% of the total financed price, but EasyHomes keeps things simple by setting all down payments at $2,000.
You then make monthly payments until you pay off the financed amount, usually over a term of 20 years.
Because you’re dealing with actual people instead of big banks, owner financed deals have a higher degree of flexibility and negotiability.
It’s Easy to Qualify For: Because owner financing is done between an investor and a buyer, the finance deal does not have to pass the bank’s harsh and scrutinizing regulations. If you’ve been denied a bank loan or mortgage in the past, look into owner financing as a serious purchasing option.
Also, most investors have no credit score requirement. At EasyHomes, we never ask for a credit score as part of your financing requirements.
Buy from Someone with a Customer Service Record: Sure, you can owner finance a home from anybody, even your neighbor, but is that really the best idea?
When you enter an owner financing deal, the owner is acting as the bank in this situation. Similar to how its important to choose a bank with a good reputation and customer service to ensure the security of your money, its equally important to evaluate the individual or company that will be financing your home to you.
EasyHomes has a customer centric model that works with you every step of the way to make sure your needs are covered and keep you on the right track to improving your new, wonderful home.
Evaluate the Home and Deal Thoroughly: At the end of the day, the owner is selling you their home as-is, and even though some owners may be helpful in your renovation plan, its important to remember that they are NOT landlords and will not be responsible for any issues that may pop up when renovating your home. Understand this going in and do a thorough inspection of the home.
If at any time you suspect that the home may be more work than you can handle, then it might be wise to look for a home more aligned with your rehab abilities.
Conclusion: At the end of the day an owner financing deal could be the perfect alternative to renting or securing a mortgage. The most important factor is doing your due diligence and understanding your renovation abilities before signing that contract.