If you’re thinking about selling your home and aren’t sure what your choices are, consider “seller financing” (sometimes known as “owner financing”). Owner financing is a little-known but highly effective method of selling a home. And maybe you’re wondering, is owner financing a good idea for the seller in Baton Rouge? The short answer, like with anything in real estate is “it depends”. We will talk about when it works and when it fails it in this blog post…
Here’s How Owner Financing Works
In a normal home-selling transaction, the buyer (who doesn’t have ALL of the money for a In a typical home-selling transaction, the buyer (who usually cannot purchase the property in cash) goes to a lender (such as a bank or mortgage broker) and makes a down payment, followed by regular monthly mortgage payments until the borrowed amount is paid in full.
This is how most people purchase and sell. But there is another approach to selling your property that you may not be aware of, and it includes owner financing.
Everything is similar to owner financing except for one thing: the seller of the house functions as the bank. The buyer pays a down payment to the seller and then makes regular payments (similar to mortgage payments) to the seller until the house is paid in full. Once the house is paid off, ownership transfers to the buyer.
Many Sellers Are Wondering, Is Owner Financing A Good Idea For The Seller In Baton Rouge
Owner financing is appealing to many sellers. Typically, the sellers find the following benefits attractive.
- A larger group of potential buyers to sell to (including those who might not qualify for traditional bank financing)
- Monthly cash flow from financing payments without worrying about tenants, toilets, and everything that goes with being a landlord
- They own the house and are protected, should the buyer stop paying (They would be able to foreclose on their buyer and get the house back while keeping the down payment)
- There is no property management
- Your tax burden (if it’s an investment property) can be spread over many years instead of all the year you sell
How does that sound? You get continual income flow and safety while still being able to sell your home. That’s an excellent recipe. Whether you’re trying to sell your primary house or you’re a landlord looking to start selling part of your rental portfolio, owner financing might be a wonderful choice for you.
If you’d prefer to spread out payments or to have more buyers trying to buy your house, owner financing might be a great option for you. If you’re serious about selling your house and want to explore all of your options, take a closer look at owner financing.