When part or all of the purchase price (excluding the down payment) is carried out by the seller, the seller if offering owner financing. Owner financed is not as common as the seller is assuming financial responsibility for the buyer. In the majority of cases, the buyer is unable to obtain funding for the property through traditional mortgage providers.
What You Need to Know About Owner Financed
Instead of going to a traditional bank, the buyer gives a financing instrument to the seller. This document will serve as evidence of the loan and the buyer will make payments to the seller. If the property is free and clear, the seller can carry out all of the financing. The buyer and seller will agree upon an interest rate, monthly payments, and the loan terms. The security instrument is recorded as public record to protect both parties.
Different Forms of Owner Financing
Sellers and buyers are able to negotiate the terms of owner financing, subject to state and usury laws. While a down payment is not required, down payments are often made to show promise by the buyer that they will be capable of uploading the terms of the loan. Down payment amounts vary based on the seller’s preference and the buyer’s financial capabilities. Sellers prefer the down payment as it does protect their equity.
If you are considering owner financed property, contact our Davis County title company for more information, 801-825-1313.
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